What are 10 reasons that would explain the new escalation of the dollar – Economy

In the wholesale circuit, the dollar again rose 3.9% yesterday, closed at 39.05 dollars and was at the limit of 40 dollars. The odds accumulate an increase of 7.9% in just one week of market. Several factors have been brought together to explain the awakening of the North American currency. End-of-the-month advance, corporate hedging, increased demand for future dollars, reduced exporters supply, low rate anticipation, matched with a country risk that does not yield, negative economic data, disturbing investigations, Work stoppages and security fiasco for the Boca River during the G-20 era, reports the newspaper Ámbito Financiero.

The matutino lists the 10 reasons that would explain the new escalation of the dollar

1- Increased demand for a future dollar: the Friday holidays in the city and the doubt about the opportunity to make it work Thursday by the summit of the G-20 have allowed to anticipate the exchange rate practically at the end of the month. Businesses exceeded $ 1.5 billion, with an implicit rate of 60% for the month of November, which closed at $ 39.50. The Central Bank is said to have intervened to sell $ 600 million.

2- Coverage of banks and companies: not so much on the spot, but in the long run. As in recent days, and in order to reduce exposure in local currency, foreign entities and companies realize a dollar with an estimated percentage of up to 30% of their positions, in order to close the year-end balances. .

3- Reduced exporters' offer: The export offer of recent days would have been only 130 million USD. Nearly a quarter of the usual volume. They believe that the place could be normalized as of next week with the beginning of the sale of wheat.

4- Expectation of low interest rates: although the BCRA has remained virtually unchanged, the Leliq rate is 61.24% per annum and could be lowered by 60% if the expectations of inflation drops for the second consecutive month, REM. The last poll will be known next week and the previous one has already shown a compression.

5- Increase in the money supply: the latest call for bids for Lebac generated a monetary expansion of 122,234 million dollars. One part was neutralized with Leliq, another part with Treasury bills. In Central, they estimate that because of the seasonal increase in the demand for money, they will be able to develop a net amount of 82 000 million dollars. Monetary relief from the tourniquet is expected, albeit with caution, and the dollar / rate trade off will be monitored.

6- Disarm the "carry trade": the rise of the dollar during the last week ate two months of the rent of a fixed term or a letter. An incentive to close positions, after recovering part of the year's losses in October and early November, in a negative global environment for emerging markets.

7- A country risk that does not decline: Argentina's sovereign bonds continued to yield ground and the yields of some species such as AA25 exceeded 12.5%, just below country such as Byelorussia, Rwanda and Cameroon. The downside is the firmness of country risk measured by the EMBI + Argentina, yesterday at 690 basis points.

8 – Negative economic indicators: the last battery of indices released by the INDEC with declines in economic activity has widened the window of doubts about the form of the letter that will have the exit of the recession. The ruling party hopes it will be a V, while several private economists and financial badysts are more likely to have an L.

9 – Negative political indicators: they did not fall well, especially abroad, and a few days after the G20, the images of the fiasco of the security operation for the final Libertadores. Neither has helped stop aerospace guilds that complicate airline flights, plus today's carrier power measurement, which will paralyze trains, buses and subways between 4 and 7.

10- Rebellion of Cristina de Kirchner in the polls: the latest polls on the image of the main political leaders were worrying for the market, with a deterioration for Mauricio Macri and a possible triumph of the former president in the theory of internal Peronism. They say that such a possibility is the main fear for those who have to finance Argentina.