The rebound of the dollar to 40 pesos would slow down the rate cut and complicate inflation in December

The dollar rebounded at the beginning of the week. After climbing 3.6%, the market closed yesterday at the limit of 40 dollars in banks and bureaux de change. At Banco Nación, which usually has the best price, the course is over at $ 39.90. Although the currency has returned to the levels of early October, nobody is unaware that this new rebound will have an impact on other variables, although it will be necessary to see how far it goes.

This rise in the dollar makes It is almost impossible that gasoline declines in December. This question was very exciting for the government as it could also help moderate inflation in December. The oil companies doubted, but they did not exclude it because of the sharp drop in the price of oil.

But if they hesitated before, they will exclude any diminution directly. It will also be necessary to determine whether the exchange rate adjustment generates an inflationary surge: it is true that most entrepreneurs have adjusted their calculations with a dollar to 40 dollars, but certainly not in all cases. And on the other hand no one is able to make sure where it can stop. That is, if the level of yesterday is a ceiling even if it is temporary.

Inflation in November would be closer to 2.8%, but no one could guarantee that the next month would not return to levels of 3%, which would result in a very negative psychological shock on expectations.

The bounce of the exchange hits you squarely at the rate of interest. In recent weeks, the Leliq (short-term securities issued by BCRA), which had grown from 73.50% a year at the beginning of October to just over 61% at the end of last week, was down. . It will be difficult for the rate to break through this floor now because the danger is that the demand for dollars will accelerate even more. The Leliq rate went from an average of 61.4% to 61.23% between Friday and yesterday, that is to say, it continued down, albeit much more slowly.

The way in which the BCRA influences the rate absorbs more pesos or, already in December, emits less than what is provided for in the agreement with the IMF. Both options would keep the rate high and prevent the dollar from skyrocketing. However, the reactivation of the economy could be delayed.

The jump took most economists and the financial world by surprise. Although almost everyone spoke of being cautious, few people expected a rebound in the magnitude of the last few days. With the rally of yesterday, the currency is already accumulating an increase of 9.6% compared to the floor of early November, while it was around $ 36.40.

Why is the exchange rate "awake"? There are several reasons to give an explanation. But in the last few hours, there has been speculation on this subject. The rescue of Lebac last week, which resulted in the injection of $ 120,000 million, is one of the issues that has certainly been touched. The Treasury, through the placement of new peso notes, has managed to absorb some $ 35 billion. It is reasonable to think that almost everything else has gone to buy dollars over the days.

But beside that, there are other aspects that play. Mistrust of investors is reflected in country risk, which again rose yesterday above 680 basis points. Dollar bonds have fallen again, and Bonar 2024, for example, has lost more than 2% and is already yielding 11.3% a year in dollars.

This climate of uncertainty that reflects low bond yields also affects the exchange rate. In October, the opposite situation had occurred. Country risk has decreased as the exchange rate has declined.

Some also mentioned the troubles that prevented the grand finale of the Copa Libertadores. The discomfort of society and the government, which began to blame the city of Buenos Aires, left investors with a feeling of anxiety. To make matters worse, many executives from the private bank came from Miami and New York to watch the game. Obviously, they did not come back with the best impression.