Volatility returns to marketWednesday, May 21, 2014
‘Blue’ dollar up 45 cents to 11.75
The black-market peso rose another 4.4 percent to 11.75 per US dollar yesterday as speculation over the return of a gradual devaluation policy for the official exchange rate for the currency persisted, despite the formal dollar ceding a cent to 8.06 pesos.
The so-called “blue” dollar has dipped since the official peso began depreciating last week after months of holding steady at around eight pesos to the dollar since a devaluation of around 15 percent in January.
In the few days preceding the devaluation on January 23, the dollar traded at similar levels to yesterday, at around 11.65 pesos.
Immediately after the sudden two-day deprecation by the peso, the dollar reached its current record of 13 pesos. It took until February 27 for the blue rate to drop below the 11.50 peso mark, after which the informal currency traded steadily at around 10.5 pesos, until last week.
The Central Bank (BCRA) controls the official rate, sometimes by dipping into reserves to keep the peso steady, but yesterday the monetary authority was once again able to purchase US$50 million.
After months of dwindling, the calm in the forex market following the devaluation in January also plugged the hole through which reserves flowed persistently for over two years.
The return of exchange rate uncertainty thus means all eyes will again be on the daily balance of the Central Bank’s foreign account.
On Monday, the blue dollar jumped 10 cents to 11.30 pesos, but the BCRA’s US$15 million purchase led international reserves to rise US$1 million to US$28.385 billion.
Coasting on the agri-dollar effect in the thick of the soy harvest, the BCRA was able to buy another US$50 million yesterday.
One trader told Reuters the bank, led by Juan Carlos Fábrega, “had to buy the excess from the supply of exporters.”
The CIARA and CEC grain export chambers — which account for a third of all exports from the country — reported on Monday that settlement for the year had reached US$9,442 billion after the US$670.493 million sold last week.
With the soy harvest lasting approximately until the end of July, the sector has about two months left to sell the bulk of the US$15.691 billion left to beat the record of US$25.133 billion set in 2011.
Although settlement was not low last week, it clocked in 29 percent lower than the near-US$1 billion figure posted the for the previous seven days, meaning the cushion for the BCRA to keep reserves afloat won’t be as soft this week.
Prices for soy in Chicago have remained above US$500 this year, and a record harvest of more than 55 million tons has been forecast for the season.
Herald with DyN