The "veranito" of the dollar and the electoral uncertainty – 02/09/2019

The "Veranito" of the dollar continues to mark the financial recovery of the beginning of an election year which, according to experts, provides for three stages.

These stages or phases are sketched out according to what is thought to be the entry of currencies into the country and the evolution of the interest rate.

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The current has well-defined characteristics and responds to a decisive fact for the world: the owner of the Federal Reserve, Jerome Powell, advanced and repeatedly ratified that rising interest rates in the United States. It will be paused.

This decision has changed the direction of capital movement around the world and has eased the external panorama of emerging countries.

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After that Turkey, Uruguay, Paraguay and several other countries went on the market and obtained credit at rates considered reasonable. Wing Argentina he touched only one price improvement of their obligations and lowering the country risk of a very high level to 630 points.

We could say that this news "Wind back" The policy of monetary contraction linked to the high rates practiced by the Central Bank has been decisive in consolidating the calm of the exchange rate of recent weeks. dollar at $ 37.82 in the wholesale circuit.

Among the many questions asked, financial market observers formulated two questions:until when lasts the "veranito" of the dollar? andwhen and how will the electoral uncertainty in the foreign exchange market weigh?

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Nowadays, the characteristic is that the rate in pesos (Fixed term at 39.6% and large deposits at 40.8% per annum) The scenario prevails and the dollar bid prevails in investor understanding that, in the short term, the exchange rate will beat the dollar.

They estimate that the next step will be the one between April and June, when revenue from grain export dollars will be strongly felt.

In other words, it was believed that, relatively, also there will be more dollars than pesos go around and, therefore, the "veranito" could have an extension.

This position is also supported by the fact that the Treasury would sell $ 8,000 million Monetary Fund loan to public sector payments.

Against the backdrop, badysts are convinced that the central bank will continue to apply its policy of monetary contraction, which should be interpreted in the light of interest rates that will exceed inflation for some time.

Already for the stadium they estimate will begin in June, the forecasts are weaker.

Nobody risks what the degree of dollarization pre-elections on this occasion which, as on other occasions, will move in line with the expectations generated by the polls.

But, from a financial point of view, they risk that the scenario is characterized by a reduction in the supply of dollars and an increase in expenditures.

In government, they refuse to do optimistic economic forecasts but they believe that, at that time, wages can earn a point of inflation.

And to that will be added, as usual, a resurgence of the credits D & # 39; money with funds from ANSES before the elections and even more after the very bad data on the declines in consumption and economic activity.

The downwind coming from abroad continues to encourage the calm of the exchange rate, the improvement of Argentine bonds and equities and the lowering of the interest rate. But he still can not turn around the strong recession in which the country is immersed. These are defensive times and short steps to see if politics can open new horizons.