Why the free dollar and financial quotes are jumping

Parallel dollars started the week with growth and maintained an upward trend on Tuesday. The curve has already been rising since the end of the month after several months of stabilization. Among the main reasons are low field liquidation and falling rates.

In detail, Dollar MEP was up 1.50% around midday on Tuesday to $1,289, cash with settlement was up 1.60% to settle at $1,317, and blue marked a gain of 2.43% to hit $1,265.

As for the reasons for this rise, consulting firm 1816 stated in its report: “The financial exchange rate exceeded its highs on May 22 and, although the rate of increase does not reach the rate of the worst days of the fourth week of May, it cannot be overlooked that the peso suffered sharp declines for two days in a row ( which had its correlation with asset prices) and that he again reversed more than a month’s transfer in just one day. Low spot volume suggests that export liquidation (and therefore CCL supply through the mix) fell yesterday, which may explain, at least in part, the currency weakness.”

Regarding the latter, the Chamber of Petroleum Industries of the Argentine Republic (CIARA) and the Cereal Exporters Center (CEC) reported that companies in the sector paid out US$2.612 million in May, representing an increase of 37% compared to the previous period. April, but also down 37% from May last year, at the height of the drought.

“Foreign currency earnings for May are the result of the export dollar regime in effect since December 2023, international prices, the impact of weather on corn and soybean yields, and the relationship between raw material costs and grains,” the companies, which together account for 48, said in a statement. % of Argentine exports.

For his part, the economist Gustavo Behr He assured that “the reallocation of fiscal and free dollars will be driven by recent political tensions, delayed parliamentary consideration – and doubts about possible additional policy concessions – in the Basic Law and budget package, a more cautious external context and lower liquidation rates that are driving the pace of BCRA purchases.” . This comes at a time when there are rumors that the cancellation of the Chinese swap could be added to the next bond payments.”

“Since the gap is already on the order of 45%, I think it would be important that it stabilizes quickly to avoid worsening the expectations of economic agents and activating the distortions that are usually generated by a larger gap. and a possible partial transition to prices, although mitigated in the current environment due to the recession,” he added.

Bye, Pablo RepettoEconomist Aurum Valores said the increase was a reflection of the unattractive level of interest rates. “Peso rates have fallen so much relative to the official’s rate of devaluation that there is no incentive for the official to liquidate foreign currency, so the supply of the mixture is reduced. There are also many exporters who, at this level of rates and such a backward exchange rate, prefer to incur debt in pesos rather than sell the currency in advance, as happened in the first quarter,” he said.

It is worth recalling that in mid-May the Central Bank again reduced the rate by 10 percentage points, raising it from 50 to 40% of the nominal annual rate. This was the sixth reduction since December.

On the same line Juan TruffaEconomist Outlier attributed the rise in prices to the fact that the volumes entering the foreign exchange market from exporters are quite meager, with the exception of agriculture, as well as the fall in rates that occurred some time ago almost two weeks ago. and led to a shift in portfolios. Then we can mention the Basic Law, which, although it has been decided, is still lacking to have a positive vote in the Senate. We don’t know to what extent they can go, but we don’t think they have the strength to do anything cruel.”

Speaking about how much the dollar could rise, Behr noted: “This will depend on the development of internal and external events, greater caution in the world and in relation to emerging markets. If the deterioration deepens on either of the two fronts, in the short term it could test levels around US$1400which would represent a gap of more than 50%, which would already be too high.”

For his part, Repetto predicts that CCL could reach $1,350 and MEP $1,320 at the end of June. “These are possible prices that are not extraordinary,” he said.