Exchange peace is becoming stronger and stronger. The price of the dollar consolidates below the line $1,400 in the official segment and the distance with respect to the ceiling of the flotation band amounts to 23%even with the strong demand exerted by the Central Bank with the purchases of reserves. The market believes that the peso will continue to appreciate in the coming months, boosted by the agricultural supply with the liquidation of the thick harvest. Operators, meanwhile, recalculate the ranges in which the price would move.
In the market they observe an “intense” flow of dollars entering the country, so the supply is imposed. At the same time, they detect little demand for foreign currency from the private sector, with little incentive to buy due to low devaluation expectations and the dollarization of the previous months. The combination of large supply and weak demand for dollars forces the exchange rate to drop below $1,400. Although more rebounds could not be ruled out in the short term, analysts say that, if they occur, they would not be significant or sustainable.
The exchange rate appreciation occurs despite the acceleration of inflation: the Consumer Price Index (CPI) advanced in March to 3.4% monthlyas reported by INDEC. President Javier Milei affirms that, in addition to seasonality and rate adjustments, the acceleration is explained by the effect (with a delay) of the fall in demand for pesos that occurred prior to the legislative elections, but he assures that in the coming months “inflation is going to collapse.” Private economists agree that he will give in, but are less optimistic than the President.
New floor and ceiling that they foresee for the price of the dollar
“In the short term, it is assumed that the supply of dollars would continue to be in control based on the strong seasonal liquidation of the agricultural sector, which is why it will depend mainly on the Central Bank to define the floor through the intensity of reserve purchases. I estimate that $1,300 should act as a floor for the official wholesale exchange rate, taking into account the accumulated exchange appreciation. As for the ceiling, in the second quarter it should not exceed $1,450“calculates economist Gustavo Ber.
Auxtin Maquieyra, from Sailing Inversiones, estimates that with the current scenario, of strong dollar inflows both from exports and debt issues abroad, in the short term the exchange rate could find a floor around $1,330 and a ceiling close to $1,415. It states that these levels reflect, on the one hand, the persistence of financial flows that contain any attempt at a significant rebound and, on the other, the presence of the Central Bank on all days with large purchases of reserves.
Pablo Lazzati, CEO of Insider Finance, estimates that in the coming weeks the exchange rate will adjust until it finds a apartment in the area of $1,380 and a ceiling around $1,480. In any case, he affirms, it will depend on how agro-exporters behave with the liquidation of the coarse harvest with the exchange rate at these levels: they could delay part of the sales to wait for an eventual rise in the price, which would reduce the supply and end up putting pressure on the exchange rate.
“A key factor to monitor is the price of urea, essential for crops such as wheat and corn. The conflict in the Middle East strongly drove up the cost of fertilizers, with increases of up to 20%which raised production costs and, consequently, the prices of agricultural commodities. If an agreement is reached between the United States and Iran and costs normalize, commodity prices could decline. This would impact the field’s decision to liquidate dollars and the dynamics of the exchange rate in the coming months,” says Lazzati.
The dollar is very close to a floor, according to analysts
Santiago López Alfaro, head of Dracma Investments, maintains that the exchange scenario for the coming months is very positive due to the large liquidation of the large agricultural harvest, which is now starting. He estimates that the decline in the exchange rate “should stop more or less here” and, in the event of a rebound, it would not be forceful: at most, it would recover the nominal fall so far this year (-7%)but foresees exchange rate calm until June due to the expectation of a large supply of dollars from agricultural and energy exports.
“There is a consensus in the market: during the next two months (April and May) and part of June, there will be a lot of foreign currency income to the country. From agriculture, they are expected between US$8,000 million and US$10,000 million. All analysts believe that within two months The official exchange rate will be calm because there will be a lot of currency supply in the market. If we look at what happens every year, the exchange rate rebound could occur in the second half“adds Ian Colombo, financial advisor at Cocos Gold.
For the analyst Gastón Lentini, the price floor should be around $1,400. He believes that current levels provide a “phenomenal opportunity” for investors interested in buying shares of technology companies that operate in the US market through Cedear. In this way, they would take advantage of a relatively low exchange rate and depressed prices in the technology segment after several months of declines.
“Now, the bearish dynamics of the exchange rate is sustained mainly by the positive flow in the financial account. The income of dollars via bond issues is still consistent and generates a supply that exceeds demand. Added to this is the trade balance, still positive, and high levels in oil prices, which amplify the effect. At the same time, more orderly market expectations, in which the nominal value begins to stabilize and reduces the pressure on the exchange rate coverage,” adds Maquieyra.
Going forward, according to Maquieyra, the seasonality of the agro-export sector will play a key role. The beginning of the heavy harvest will increase the entry of dollars into the exchange market, so the growth in supply should extend exchange tranquility. If this scenario of positive financial flow and inflow of commercial dollars holds, it does not foresee “clear factors for a relevant increase in the exchange rate in the short term, but it does foresee a greater probability that it will remain in the area of between $1,330 and $1,415with a slight downward bias”.
