dollar finance investments
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And it is that Companies begin to part with dollars at the beginning of the new month to fulfill their commitments to employees. They have to acquire the necessary pesos to pay them these extra benefits provided by law for the sixth month of the year, of which the most important is the Annual Complementary Salary (SAC) or bonus, which is equivalent to half a salary that is paid in addition to the payment of the month.
This usual seasonal dynamic of the exchange markets, which always brings a certain calm at the beginning of June year after year, usually relaxes in the second half of the month because these funds return to the blue dollar market from the hands of workers in search of protecting them from inflation and devaluation. Thus, although this year the saving capacity is greatly reduced due to the strong recession that liquefies salaries, there is usually an upward trend in the last 15 days.
But Quintana warns that, “in Argentina, it is difficult to make forecasts, taking into account the sudden changes and news that can alter the panorama. And in this month of June 2024, the extra elements that could alter the dynamics of the Dolar blue and the financial ones are more than usual.
The fate of the Bases law will mark the passage of the blue dollar
Quintana points out that, “the concrete possibility of the sanction of the Bases law can generate a positive expectation that can influence the markets and limit possible increases.”
In this sense, the economist Camilo Tiscornia, director of CyT, points out: “What happens with the Bases law and the fiscal package is going to be a key element.” What happens, according to analyst Elena Alonso, is that, if this regulatory framework is approved, “it can generate more peace of mind because it reinforces the credibility of the Government.”
“The Bases law is going to be a determining key for the blue dollar. If approved, there may be an improvement in exchange rates, especially financial ones, which are arbitrated with the informal exchange rate. But, if it falls, all the parallels can be appreciated even more,” warns the economist Federico Glustein.
The fixed term rate, a key condition
Another key element moving forward will be monetary politics. “You also have to see what happens to the rate of monetary policy and its effect on the fixed term performance“says Tiscornia. He explains that the Treasury is raising the bill rate and that is today the reference rate for many in the market.
Alonso points out hopes that the Government will not modify the monetary policy rate again and anticipates that it is likely that they will moderate the downward trend that they have been showing recently. Let us remember that the Central Bank (BCRA) lowered the rate twice in 15 days. But the banks offer returns below 3% monthly for the fixed term and Luis Caputo, Minister of Economy, asked them to take as a reference the interest of the LECAP that the Treasury is placing, not that of repos, which is the reference that was established by the BCRA.
If they decide to further lower the rate, Quintana anticipates that there may be more upward pressure on the dollar, which will tend to remain at current levels, despite seasonal effects. Thus, as Glustein points out, “we will have to see how the market acts with a validated rate of 4.2% (that of LECAPs) against the pre-existing 3.3% (the reference rate, which is that of Passes)”.
The liquidation of agriculture, key for the blue dollar
But, on the other hand, Quintana mentions that we will have to “It is also possible that agricultural income will increasesomething that would feed the supply of alternative currencies.” And, “we have to see what happens with the liquidation of agricultural dollars because in recent days they have been weak and that can generate an expectation of devaluation in the future,” Tiscornia mentions.
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Reuters
Thus, the harvest will also be a key element in June. “We have to see how many dollars the Government manages to capture from the agro-export sector. The Government is not managing to buy a large amount of foreign currency and that could trigger a small jump,” says Glustein in this regard.
“I do not rule out increasing the price of the blend dollar for exporters to encourage exporters: they can take it to 70%30%,” says Alonso. However, the Government has denied many times that it has any intention of moving forward on that path.
It happens that the Government recalibrated the intervention strategy to contain the exchange gap since December and began to do so mainly through the implementation of the “blend” dollar for exporters, but the currencies used in that containment mechanism, to date, have already equals 80% of the trade surplus and exceeds what Sergio Massa and Martín Guzmán spent in their respective administrations as ministers to intervene in financial exchange rates. That worries the Government, which does not want to continue losing dollars there.
Blue dollar: what’s coming for June
Thus, everything indicates that June may be a month without major shocks at the beginning for the blue dollar, although it does not seem to abandon the upward trend. Beyond the initial seasonal factors, could fall and find a new floor if the Bases law and the Fiscal Package are approved, that would inject confidence in the Government’s management or have the opposite effect if it is not approved.
But, towards the end of the month, a more marked upward trend could be seen, due to the arrival of the bonus pesos, although more tied to the fate of the regulations mentioned in Congress.
Nevertheless, The dynamics of dollar inflow will also be a key element and depends very strongly on what exchange rate policy the current Government decides to apply. to encourage liquidation at this key time of the year for the sale of the thick harvest.
