why is it going up and what will happen in january

The blue dollar marked its fourth consecutive day of rising this Tuesday and was in $ 165. That way, he’s already racking up a climb of $ 13 since he woke up from his sleep last week..

And in the shadow of blue, which these days has captured the eyes of the City, the exchange rate has also marked significant increases. In fact, the “savings dollar” (official plus tax) has already hit the $ 148 mark.

Why is the blue going up?

This Tuesday was another day of tension in the “caves” and redoubts where the US note is traded informally. Around noon it sold for $ 167, but the price then moderated and ended with a rise of just $ 1 from Monday’s session.

From the City, they claim that, as in previous days, renewed demand is pushing up the price of blue. The week is short, operations are concentrated in a few days, and businesses and individuals alike want to convert their pesos into hard currency. In other words, a movement of blanket motivated and accelerated by the arrival of the end of the year.

Another key question in understanding the uptrend is to see where the weights that go to the blue market come from. In this sense, analysts and market voices coincide to point Aguinaldo as one of the main causes. And, on the side of stores, many of them would go to the side ticket to protect the value of the funds they got for the end of year sales.

“Businesses were in dire need of pesos earlier this month. Now this money has reached the people and whoever is with it Christmas bonus in your pocket, many people will buy tickets“commented a trader in the city on Wednesday, amid a parallel surge in prices.

The source, who pointed to the intense movement of banknotes, added: “A week ago no one wanted to buy. But today, with pesos in hand, the individual is heading for the dollar. there is no other option. ”

And in the market, they also warn that many merchants who, despite the depressed activity that accompanies these festivals, have managed to pocket pesos, are immediately looking to dollarize.

With anticipation, some analysts had already warned that tensions on exchange rates could arise at the end of December due to payment of half the bonus. The idea that this extra peso would end up in the dollar market was supported, for example, by businessman Miguel Blanco, director of IDEA.

“There is a very big threat in December, because they will issue hard for the payment of bonuses, and it will all be pesos in the street which will put pressure on the dollar.“Blanco predicted iProfesional at the end of November.

In agreement, Claudio garcia, from PR Corredores de Cambio, speculated: “This year a lot of people are not going on vacation, there may be a surplus of pesos on the Christmas bonus side, so there is probably demand on the parallel side. ”

Other market operators had also commented to iProfesional about the possibility that “after the middle of the month there will be a little more interest in blue”.

On the other hand, what everyone seems to agree on is that mega peso question the central bank would have a severe slap on the dollar during summer.

In fact, as to what the immediate future holds, the mood of the city indicates that the blue dollar has finished its nap and now he will follow a path of ascents.

“January will also be a month of demand. I don’t think there will be an offer that will drop the price below $ 150,” the operator said.

On the rise: The blue dollar accelerated before the end of the year.

Dollar 2021: what the market expects

Looking to 2021, an economic and financial question is how the price of the dollar will behave in our country. For the moment, the monetary situation is relatively calm, but everything suggests that this will not continue indefinitely. And the awakening of blue on the last business day of last week disrupted the market.

Next year is uncertain in terms of inflation, with projections between 50% and 55%, according to the Market Expectations Survey (REM).

Since the official price of the American currency has followed the evolution of this index throughout 2020, some analysts anticipate a price close to $ 250 from the parallel and $ 130 for the agent towards the end of 2021.

However, the government is celebrating that 2020 ended in a quieter way than expected. “The current year has surprised positively in terms of currency, because after what happened in 2018 and 2019, we were expected to experience a sharp devaluation of the currency. However, that did not happen, ”says economist Martín Kalos, director of Epyca Consultores.

He explains that although the economic crisis worsened following the pandemic, currency controls and BCRA interventions in the official market and parallels have avoided major shocks.

However, he cautions that There is a depletion of reserves which is very worrying and a latent demand derived from the distortions generated in foreign trade and in speculation or savings.

He stresses that the economic objective for 2021 should be to emerge from the crisis and uncertainty, achieve it and stabilize. “If a 5.5% rebound in activity is achieved and growth begins, even if it is slow and gradual, we can have an exchange rate next year that keeps pace with inflation”, Kalos anticipates.

Otherwise, warn that we will see episodes of devaluation nominally purely speculative which will respond to inadequate management of the current account and financial capital due to a decline in the liquidation of exports and a greater demand for dollars to import.

There is a reserve drain which is of great concern to experts

A key first quarter

For her part, the economist and teacher Candelaria Botto stresses that we must be attentive to the development of the year, that it will be electoral and that it will be marked by an agreement with the International Monetary Fund (IMF). “I think the exchange rate tension will be felt, mainly, in the first quarter of the year, and that we will have more stability by the middle of the year,” he predicts.

In this sense, he emphasizes that the official exchange rate followed the evolution of inflation, which marks the loss of the value of the peso. “It is essential to think about what will happen with inflation and all its components to predict how the dollar will evolve. Today we are at levels of more than 3% per month and that will be decisive and see what that’s going to happen with parity, with tariffs and price regulation in 2021, ”he said.

Another variable that he considers closely watched is the evolution of surplus commercial and pressure from export sectors, which always push for devaluation in order to obtain higher incomes. Although, this time around, the fact that the soybean price is close to $ 500 per tonne could be an incentive in that regard.

Along the same lines, Camilo Tiscornia, director of CyT Asesores Econónicos, observes that, “in an economy like Argentina, it is believed that all dollars will increase next year”. However, this analyst is betting that the government will try to the dollar increases less than the expected inflation and, for that, the exchange rate will move little.

Thus, Tiscornia expects that, as usually happens during election years at the local level, the exchange rate will not follow inflation in 2021 and predicts that, in a scenario where the financial situation is stable, the official can reach $ 110.

On the other hand, he points out that one element that can play a role in the currency’s decline will be the strong inflow of currencies expected in the second quarter of the year due to the strong harvest. “In normal times, the soybean dollar goes in and it goes back up to the dollar. With a commodity price above US $ 500, the government is expected to have the dollars to keep it going, without having to sacrifice. the BCRA reserves. “, he said.

Blue dollar: will it come back close to $ 200?

The stability of the exchange rate in recent weeks is “clearly temporary” and as the underlying economic problems remain unresolved, “sooner or later” the price of the parallel or blue dollar “will pass the barrier of 200 pesos”, predicts economist Esteban Domecq.

The director of the consulting firm Invecq said that there are “two scenarios” in terms of inflation for 2021, determined by what happens on the foreign exchange front, for which he has predicted between 45% and 50% in a “optimistic scenario” and He stressed that the pessimist “is difficult to model”, so he preferred not to give percentages in this regard.

“We are in a period of clearly temporary stabilization of the exchange rate,” he assured in radio statements, while warning that beyond the economic problems “the rise of the dollar has to do with a macro problem, in an inflationary economy“.

In this sense, he stressed that the price variations occur within the framework of an “irregularity in which the increases and decreases are greatly exaggerated, but always with an upward trend”. “As long as the underlying issues are not resolved, the trend will always be up and sooner or later the dollar will break through the 200 peso barrier. I would say sooner rather than later,” he predicted.

For Domecq, the last few days, when the central bank moved from a short position to a long position and international reserves abandoned their decline, “occur in a context where imports are slowing” and although ” a difference (between dollar prices) of 70% is better than that of 120%, it is still a significant difference. ”

The economist attributed these differences between blue, MEP, counted with liquidation and official, to “this pattern of multiple splitting which was imposed last year, for which no one knows how much the dollar is worth”.

In any case, he warned that the increase in reserves “is a trickle” and that he does not see “despite these positive days, that a process of sustainable accumulation of reserves is beginning”.

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