Sunday, December 10

Blue dollar without a roof?: why it does not stop rising and how far it can go

The local stock market did not help either and made the picture more complex: fell -once again- the punishing Argentine bonds (yield up to almost 29%, clearly at default levels) and the country risk exceeded the line of 1,900 basic points.

the parallel ticket climbed $2 this Tuesday and thus broke its previous all-time high of $210 that it had marked intraday at the end of 2021, with which the exchange rate gap exceeded 102% reaching its highest level of the year.

It happened on the day that Foreign Minister Santiago Cafiero met with the Secretary of the United States Department of State, Antony Blinken, in the framework of negotiations with the international credit organization.

The truth is that the lack of political progress between the Government and the opposition accentuates the uncertainty regarding the support and the viability of closing an agreement with the body before 22-M. Before which, many analysts begin to evaluate different scenarios.

Therefore, some operators believe that the rise in the informal dollar could continue in the next few days, even hovering around the level of $220, taking into account the evolution of the monetary base, together with the stock of remunerated liabilities of the BCRA (the sum of Passive Passes, plus the Leliq), and as long as there are no encouraging signs in relation to government negotiations with the IMF.

In the last hours, the Minister of Economy, Martin Guzman, referred again to the negotiations with the IMF, and he warned that if this body “pushes Argentina into a destabilizing situation, it will also have less legitimacy in the future.”

Below is the view of some analysts on the current dynamics of the blue dollar, and certain projections for the coming weeks:

Andrés Borenstein, Chief Economist at Econviews

There is an excess of weights and a lack of confidence. The BCRA rate hike improved fixed terms (pay up to 39% annually), but not interest-bearing accounts.

A relaxation of the price of the blue dollar will depend a lot on whether the agreement with the IMF is finally advanced, and on whether the BCRA depreciates the official dollar a little faster, with which there will be room to decompress somewhat the “stock of the stock “(to financial dollars).

Christian Buteler, financial analyst

This rise in the blue dollar seems logical to me, given the amount of pesos that has been issued during December.

As soon as the demand for money starts to fall a bit, the blue starts to rise.

The advance of the parallel can be stopped if the MEP dollar falls. Otherwise, it seems to me that we are going to have a summer with a rise in the blue dollar a little above what we have had in recent summers.

Juan Pablo Albornoz, economist at Ecolatina

Most likely, two factors are at play in the rise of the blue dollar, one seasonal and the other specific to the current situation.

In the first place, the strong seasonal increase in money demand in December begins to normalize towards the second half of January, and this continues in the first quarter of the year. A portion of this lower demand for pesos is surely being channeled into the parallel market.

Secondly, the political situation does not help: the fact that the arc continues to be drawn with respect to the agreement with the IMF does not allow to anchor expectations and dispel doubts of a disorderly exchange rate event (I think there are still tools to avoid it, but it is difficult to rule it out) . This political-economic uncertainty is reflected in the Argentine sounding board that is the dollar.

Frederick Glustein, economist

There is a scenario of uncertainty due to the economic path and rumors about the possibility of a default with the Fund. It has a direct line with the drop in bonds, which have an almost constant fall, and the country risk that crossed the barrier of 1,900 points.

Clearly there is a hedge towards the dollar from the agents that are beginning to demand free foreign currency and the inflation data that clearly show that there is no slowdown. All this set of variables and the mistrust in the economic plan, which is not yet known and generates mistrust, pushes the blue

Going forward, I see the price of the blue higher, especially in the next few days, although close to a provisional ceiling that it reaches when it picks up a little momentum. Difficult to reach a figure of $220 this week, putting a psychological barrier.