Free dollar sets a new record: three keys to growth

He a free dollar brings 25 pesos or 1.9% this Tuesday $1305 on sale, the new nominal maximum. How much June rose in price by 80 pesos or 6.5%.a rate that is expected to exceed inflation over the period, a trend that was already observed in May, with the unofficial currency rising 17.8% versus 4.2% in the INDEC Consumer Price Index.

At a wholesale dollar price of 906 pesos currency gap at a wholesale dollar ($905) it now reaches 44.2%which is the highest figure since February 1 (44.5%).

Which factors What’s motivating this new bullish streak in banknotes?

1) Seasonal factors. There are reasons for demand to increase in the short term. A “ultra-short” financial week may encourage savers and investors to take positions in currencies given the holidays on Monday the 17th, Thursday the 20th and Friday the 21st. To these dates we must add the US holiday of June 19th, which always affects domestic operations. With little to no underlying market activity until Monday, June 23, currency hedging is an option.

There is also demand that is putting pressure on the price of the dollar in alternative segments, given half bonus payment for official employees, since the excess of this liquidity is suitable for conversion into foreign currency, as is seasonal demand before The winter vacation. In the latter case, given the much higher public price of the dollar on the formal market – about $1,510 with an average sale in banks – it is more convenient to purchase banknotes on the parallel market – at $1,305 – or dollar profit center – at $1,244. – to cover card expenses in foreign currency.

2) Negative rates for fixed periods. In recent months, the BCRA has increased its downward adjustment of the monetary policy rate, setting it at 40% of the nominal annual rate. In this sense, since March the monetary authorities have decided to introduce a fixed rate at which commercial banks pay their clients’ deposits; They now represent about 30% of the annual nominal return, which in effective terms leaves a return of 2.5% as monthly effective rate. This negative rate in real terms, with monthly inflation still above 4%, is encouraging some savers, as well as small traders and businessmen, to invest their savings in buying dollars to better preserve the value of their savings.

3) Relative delay. There has been a lot of talk in recent days about the prospects of exiting the exchange rate trap, which, if it happens in the coming months, will receive the approval of the International Monetary Fund (IMF). This exchange rate unification comes with a huge question: what would the dollar exchange rate be without official controls? Considering that the blue dollar and financiers are registering profit about 30%and the official exchange rate has appreciated by only 11.9%, placing part of the available capital in dollars can be considered convenient in the conditions inflation is about 80% in the period facing the horizon for exiting the “traps”, including the unification of the exchange rate.

Juan Manuel Francochief economist of the SBS group, said that last year staff reportIMF “this time they mentioned the need for a positive real rate in pesos, the key point when thinking about normalization of the foreign exchange market. In this sense, they said that by July the government must present a roadmap to eliminate them, adding that in July “the dollar must end.” to mix“”.

“It is important to resume higher settlement rates to improve on recent BCRA purchases that have been accompanied by more erratic behavior, while taking advantage of favorable seasonality before second semester usually with fewer offers foreign currency,” said the economist Gustavo Behr.

“The expectation of positive real rates will also contribute to the calm among financial dollars, which continue to hover below $1,300, as operators lean toward a turnaround in the current economic-financial context following the latest restructuring,” said the head of Estudio Ber.