The blue dollar rose by $4 in two days: the reasons for the rally

the blue dollar woke up in the first two wheels of the short week. Even though there are fewer pesos on the street at this time of the month, the parallel ticket added four pesos in just two days and reached $208.

Political uncertainty, excessive inflation expectations and acceleration of the rest of the prices partly explain the increase in the informal exchange rate.

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Operators and economists consulted by NT they pointed out the three main reasons for which the blue dollar has risen again in the last two rounds.

1. Inflation continues to rise

the blue dollar -which this Tuesday closed at 208 dollars, three pesos more than “solidarity”- is in the same level as the last working day of December of 2021. And we are still far from the more than 223 dollars that it reached at the end of January, when the agreement with the MFI seemed to dissolve.

Prices have risen above dollar rates throughout 2022. (Photo: Marcelo Capece/NA)

So while the upside may seem significant, analysts prefer to put the numbers in perspective. On Matias DeLucaeconomist at LCGconsidered that the current increase responds more than anything else to a inflation which is not backing down and accumulating a 23% upside so far this year as blue operates at exactly the same value as in December.

2. The official dollar has accelerated

Even before the start of 2022, the central bank (BCRA) started validating a faster scan in the exchange rate. This was one of the signals that the government wanted to give to the IMF before the agreement, in which it undertook to maintain the competitiveness. That is to say the purchasing power of the peso compared to other currencies.

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If the blue shows no change from the year-end value, the the official exchange rate has fallen 15.6% since December till today. Although not linked to inflation, it is the closest alternative to price adjustment.

The three reasons why the blue dollar rose by $4 in two days

“The BCRA wants the exchange rate is not too delayed (eliminating expectations of a sharp jump in the exchange rate), at the same time as the Ministry of Finance offers instruments linked to the CER and the dollar that decompress the demand for dollarization,” said De Luca.

3. The Rise of Financial Dollars

The bone financial exchange rateswhich crossed the $190 mark in April, have been gaining momentum in recent weeks. Up about 3% so far in May and ended this Tuesday around $212.

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“There is more interest in the dollar. The CER adjustment is already a bit worn and, even with the uncertainty, inflation should come down a bit. But, in general, we see a little no more demand for dollarizationthat’s why the rise these days, although slight,” expressed a financial adviser before the consultation of NT.

In May, the dollarization of investment portfolios made itself felt again.  (Photo: Carlos Villoldo/BCBA).
In May, the dollarization of investment portfolios made itself felt again. (Photo: Carlos Villoldo/BCBA).

For his part, a foreign exchange operator interpreted that there is a certain correlation between the parallel exchange rate and that obtained on the financial market.

“With cash with liquidation which during the month was on the rise, the blue had remained a little behind. It accompanies more than all the financial, which has continued to increase. Likewise, it is a market that is evolving very Volume down“, he claimed.

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Along the same lines, it has been stated Jean Ignace Paulicchieconomist at Empiria. “You have to understand it as a rearrangement. The blue dollar came decoupled from the treasury with liquidation, so it makes sense that it corrects”. Still, he noted, “In relative terms, the exchange difference remains at low levels for this administration: these are the minimal over the past two years adjusted for inflation.

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