The dollar had another day of volatility and after having started with a strong rise, it backed down pushed by the rise in the Leliq rate, which stood at 64.8%. Still, it was above the levels of Tuesday: in the retail market it reached $ 41.95 and in the wholesaler it was $ 40.89.
Dollar and rates, up
The dollar started the day up. He touched the $ 42.40 mid-morning and was relocating after the Central Bank indicated in the first tender of the Leliq that he was willing to validate a new rate hike. Thus, after the two bids of the day, the average rate was 64.8% with an adjudicated amount of $ 210,122 million.
“What draws attention to the instability of recent days is that unlike what happened a few weeks ago this time does not occur in a context of unstable in the rest of the region,” says Guido Lorenzo, LCG consultant .
For the economist, volatility “has a great idiosyncratic component: when the exchange rate loses reference to what the price should be, the supply contracts and the demand is accentuated”.
Lorenzo believes that “for the macroeconomics this movement of the exchange rate is healthy because it prevents the entry of swallow capital in the short term, but we are not used to coexisting with this fluctuation, and even less since the monetary regime was transformed and went from being an aggregate control to counter inflation to be an interest rate control regime to iron the dollar. ”
“Inflationary inertia is not broken and prices continue to be formed by looking at the exchange rate, it is very difficult to limit this inertia, part of the inflation we are seeing responds to last year’s depreciation.” Logically, this generates that the exchange rate it is delayed and that spiral is not finished more “, indicates Lorenzo. “The focus of monetary policy should not be to control inflation through the anchor of the nominal exchange rate, but could be to return to operate with a realistic inflation targeting scheme – unlike the previous attempt – with adequate regulatory frameworks and financial account controls “.
From Elypsis, Gabriel Zelpo, “Volatility has to do with elections but this is not the only cause, in this context there is little demand for assets in pesos.The Central Bank is limited to operate both spot and futures. with the IMF it restricts the discretion of the policies enough “.
For Zelpo, the marked drop in the rate between the end of December and the beginning of February, when it decreased 20 percentage points in a staggered fashion to reach 43%, “did not help”. “If the rate had remained more stable, it would have helped to reduce the degree of volatility.”
The economist indicates that inflation “also drives instability, clearly higher inflation validates a higher depreciation.”
As part of the agreement with the Monetary Fund, starting in April, the Treasury will start selling 60 million dollars daily. For Zelpo, “this is going to be a very important tool”. Also in April and May “there will be many maturities of bonds in dollars very significant and that may come to reassure the waters a little.”
The government’s expectation is that the dollars will go out to sell the field in the coming weeks. Although from different sectors indicate that this settlement may not be so important, Zelpo bets that dollars will come. “I think the exporters are going to liquidate, if they are waiting for the worst, they will not keep the harvest because later they would not be able to liquidate the dollars, they have to pay for the inputs and the debts. It is not easy to retain the harvest with the rates we have today. “