The foreign exchange market has a busy summer, because while the free dollar prices escalated sharply in the last days, the official greenback is in the crosshairs of economists. It is that an international report reflects new pessimistic forecasts, which anticipate that a strong rise may occur both in the price of the wholesale currency and in the inflation data in this 2023.
In the middle of a presidential election year, the volatility and uncertainty will be the characteristics that will prevail. Especially in a context in which foreign currency is scarce in the Central Bank’s reserves, a fact that is aggravated by the severe drought in the countryside. And the risks of payment of the debt with the International Monetary Fund are added.
According to analysts surveyed by FocusEconomicsthe “hostile” policies to the market that “cloud the outlook”.
So they consider that the domestic demand will be “affected” by “soaring” inflation and interest rates, reduced savings and an unfavorable business environment in the run-up to October’s general elections,” detail.
In hard numbers, some economists forecast that the price of wholesale dollar can reach up to $474 at the end of the year. Figure that implies that the devaluation in all of 2023 can reach a maximum of 167%.
A percentage that will depend, in part, on the exchange policy implemented by the new government that takes office at the beginning of December. It is that some experts consider that in the last month of the year a “shock” may occur in the price of the official dollar, as a mechanism to eliminate the wide gap that exists with the references of the free market.
The price of the official dollar, according to some economists, may reach a maximum of $474 at the end of the year. So it might climb up to 167% in 2023.
Price of the dollar, economists on alert
Under a panorama of such an uncertain political and economic scenario, the FocusEconomics survey reflects a enormous dispersion in the prices projected by analysts for the end of the year, since the oscillations are between a minimum of $250 and a maximum of $474.
Thus, the The most alarmist projections for the official wholesale dollar price for the last days of December are led by the Eco Go consultancy, with an estimate of $474. And then there are C&T Asesores ($470) and Aurum Valores, with $435.
“The number that the exchange rate will have on the last day of the year is anecdotal because it depends on what the incoming management does and what price correction occurs is completely uncertain”resume to iProfessional Milagros SuardiEco Go economist.
In his opinion, as regards the inflationthere are a number of factors that drive it to locate above the end of 2022 (94.8%), beyond the concerted disinflation process that has been observed in recent months.
One of the factors that can drive the prices of the economy to a higher level than the one registered up to now are the paritybecause “they are going to try to recover part of what was lost in 2022 in the first months of the year, although the Government is going to try to take away their momentum,” Suardi clarifies.
With respect to exchange rate, maintains that along the current it will be moving “faster” than the previous year. It is that in the first half of 2022, before stepping on the accelerator in the second part of that cycle, it moved at an average monthly rate of 3.2%.
Instead, for this year we see the exchange rate moving at an average rate of 5.3%In other words, from the start we are going to have a little more pressure on the dollar, as a part of the price of imported products that are already subject to import restrictions in a context of scarcity of foreign currency. In this way, once once more an attempt is made to moderate the exchange rate delay,” Suardi concludes to iProfessional.
Due to presidential elections and a change of government, economists expect the price of the official dollar to “realign” to narrow the gap.
Change of Government as pressure on the price of the dollar
For the different analysts consulted by iProfessional, the greatest probabilities of accelerating the devaluation of the official dollar may occur in the midst of electoral tension and then generate a greater jump with the change of government at the beginning of December.
“We assume that with the new government there will be some liberation from the exchange rate in december, which will align with the informal price and which implies some lifting of the stocks. That is why our price forecast for $470 for Decemberand it may sound somewhat ‘misleading’ because all these facts should be given,” he tells iProfessional Maria Castiglioni Cotterdirector of C&T Asesores.
For his part, Paul Repettohead of Research at Aurum, who projects $435 by the end of this year, adds: “With an expected inflation similar to that of 2022 (around 95%), the rise of the dollar until the change of government should accompany the dollar below economy prices. But with a new management, the need to gradually remove exchange restrictions should be accompanied by an improvement in the competitiveness of the exchange rate.”
Therefore, that expected exchange rate for the end of 2023, measured in real terms, would be according to the real exchange rate that this same government promised to maintain with the IMFsomething that “was not fulfilled”.
Some economists who see a lower rise in the official dollar, around 90% for the whole of this year, because the FocusEconomics consensus is $341 for the end of December, also put different aspects on the magnifying glass that can cause the exchange rate to end up accelerating its course.
“We are looking at an official exchange rate for the end of the year with the nominal variables that will grow at a rate similar to last yearwhere I believe that inflation will be a little below 95% in 2022 and the exchange rate will have to follow quite closely, despite the fact that it is an election year and rates and the exchange rate are usually used as anchors to lower inflation”, maintains iProfesional Lorenzo Sigaut Gravinaan economist at Equilibra, who is waiting in FocusEconomics for a $320 bill in December.
The Government must solve various imbalances to control the exchange rate, such as shortage of foreign currency, inflation and renewal of debt in pesos.
And he adds: “There is not much room to delay the official exchange rate further because the shortage of foreign currency as a result of the drought is worsening, and that sets a limit, in a context of such a lack of foreign currency, to delay it. That is why the nominal value will continue in the lanes of 2022 with some drop, especially if there is no shock from international pressures, as there was last year.”
By your side, Santiago ManoukianEcolatina’s chief economist, who also forecasts a similar value for the greenback, concludes to iProfesional: “Without correction by, the The Central Bank would continue to validate a devaluation rate more in line with inflationto avoid a greater exchange rate appreciation, and to support a reduction in the exchange rate gap to maximize the chances of continuing to accumulate reserves”.
In this sense, he considers that the exchange policy will be tensioned between the official objective of sustaining the crawling peg (slow devaluation) and the delay showing the official exchange rate.
“We do not anticipate seeking to undo the delay, but to manage it, for which reason the The level of the real exchange rate will continue to be functional to the excess demand for foreign currency in the foreign exchange market, within a framework of lesser influx of commercial currencies. Something that will force us to constantly renew efforts to obtain resources from the financial account and/or limit the excess demand for foreign currency”finalizes Manoukian iProfessional.
