In this way, the “stock market” dollar or MEP dollar rose $16.74 (8.56%) compared to the end of March while the CCL rose to $17.44 (9.2%) respectively. As for the wholesale dollar, it advanced $4.19 (3.77%) in the month, ratifying the will of the Central Bank (BCRA) to maintain the devaluation of the currency below the inflation rate.
But once once more, expectations, mainly due to doubts regarding the agreement with the International Monetary Fund (accumulation of reserves, higher-than-expected inflation and the possibility of resorting to monetary issuance to finance the bonds granted to unprotected sectors) ignited the first spark.
“At $190 for the MEP and $195 for the blue we had a floor that was not sustainable with the inflation rate of 6% per month and a 4% crawling peg. With the negative expectations due to possible new taxes and the confusion caused by the updating of the CNV regulations, they had made a strong leap that was resolved in the blue with some “helping hands” and the non-validation of the values, which may have been promoted by some players wanting to win on speculation. At the same time, being at the end of the month the demand is low, so few players bought, rather many took advantage and sold”, expressed Federico Glustein, an economist consulted by Ámbito.
For economist Florencia Gutiérrez from the Center for Political Economy (CEPA), the rise in financial dollars was not related to the local outlook: “This week’s dynamics have to do with an international factor that when you look at the real it depreciated sharply. , especially on Wednesday (1.8%) and it was that jump that the parallel dollar and the blue hit here.When the real appreciated once more, the dollars began to fall. What I think is happening with the parallel dollars is that it will depend on the currencies of the countries in the region and on the tightening of the Federal Reserve’s monetary policy.”
The truth is that the exchange rate gaps ended below 80% and May becomes more uncertain. Local factors are already known. But at the international level, the matter is complicated and puts pressure on the Central Bank.
Volatile dollar?
“It is likely that at the beginning of the month it might return to somewhat higher prices, especially considering that the solidary -floor line- is already standing at $198, although there are eventualities that might make it jump once more,” explained Glustein.
“The interest rate in the US and the exchange rate in Brazil, in addition to the volatility of the market, might raise prices,” he added.
Domestically, doubts are renewed in May. According to Gutiérrez, the review with the Monetary Fund is a factor to watch closely. “We have to see if Argentina passes the first review in May.” The other factor that is closely watched is “how the bond policy is going to be financed” that the national government is carrying out. “It is not clear if the “windfall rent” will be approved and it is believed that this might be paid for by a larger issue that might put pressure on the dollar,” he added.
As for the official dollar, the Central Bank will continue with the same strategy of accelerating the crawling peg, but not in a high way “because it can hit inflation.”
For Glustein, this is a problem: “depreciate the exchange rate below monthly inflation and that is one of the reasons why it cannot increase reserves, even with the bulk of the harvest”, Glustein added. “It should be a strategy to accelerate the exchange rate that is appreciated by others, in my opinion, to lower the demand for imports and increase reserves, but it would not be carried out for various reasons, among others, the import of energy,” added the economist.
As for reserves, the Central Bank managed to accumulate less than 200 million dollars, despite the heavy harvest season. It is worth remembering that the accumulation of reserves is one of the goals of the program with the Fund and it will be more demanding for the second semester. For Glustein, the poor performance of the BCRA this month was due to the “increase in imports, as the exchange rate appreciated.” “I believe that Argentina is well able to comply with the accumulation of reserves because the SDRs of the Monetary Fund are contemplated, today you are arriving with almost US$1,000 of what the IMF review asks for,” shared Gutiérrez.
Lastly, Glustein noted: “Towards the end of the month, closer to June, the demand for pesos might grow to pay bonuses and the expiration of earnings for individuals, offsetting the dollarization of the portfolio at the beginning of the month.”
