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Instability and devaluation: the year of the dollar



The dollar price closed in 2018 with a rise above 100%, and the Merval index on the Buenos Aires Stock Exchange for the same period accumulated a slight increase of 0.75% when measured in pesos and a fall of 50.2% in dollars. the context in which inflation over the past twelve months will be about 48% and in which the monetary policy rate — after reaching a maximum of 74% in the first days of October — ended the year at 59.25%.

The dollar at the retail level fell today at 1.40%, closing the day at 38.85 pesos in dollars, based on the average daily value, reduced by the Central Bank. Thus, during the current year, the US currency increased by 105%, due to the fact that on the last working day of December 2017, it amounted to US $ 18,921.

In the wholesale segment, the dollar fell 60 cents today compared with the previous day and amounted to $ 37.70, with a rise of just over 101% in the past twelve months.

The highest price for the US currency was fixed on September 18, when it closed at $ 40,502, on the day when some banks were negotiating at a price of about $ 44.

Experts agree that the trigger was originally a message from President Mauricio Macri to revise the agreement signed in June with the IMF, which was not yet approved by a multilateral organization, and the objections expressed by Washington on a task that Luis Caputo headed at the Central Bank.

Mauro Morelli, an analyst at Rava Bursátil, said that 2018 is the “year of oblivion, when the cruel devaluation of the peso with extreme harshness affected the already weakened expectations of the Argentine economy.”

“On the Wall Street, the Argentine ADRs were hit hard this year, losing from 30% to more than 70% in dollars, literally liquefying almost all Argentinean companies registered in New York,” he added.

Morelli said that “financial keys for 2019 still remain: the solvency of the budget, lower inflation and exchange rate stability”, which will be impossible to separate from the electoral issue — PASO will be held in August and presidential elections in October. – and the ensuing consequences, especially before the question of the stability of the Argentine debt.

The variable that gained momentum in the last months of 2018 was country risk assessment prepared by JP Morgan, which in previous days reached a record high of 837 basis points, the highest since 2014 to date.

The increase in excessive rates paid by the country in respect of medium-term and long-term debt affected the price of sovereign bonds, such as the Discount in dollars under Argentine law, which fell by almost 40%, or the Argentine national bonus (AO20). ), with red more than 13%.

Along with the local factors of the Argentine crisis, the international context was also affected by the rate hike organized by the Fed and the projections for the new growth in 2019, as well as the consequences of the commercial war between the United States and China.

Sabrina Corujo from Porftolio Personal said that the annual balance of events on the Buenos Aires Stock Exchange "exceeded all expectations expected a year ago."

Thus, the expert referred to the latest figures, which in the first days of January registered Merval, when it reached its last record level of 35,145.45 points.

“The sharp depreciation of the currency caused by the crisis of confidence in the government has affected both the stock market and all the real variables of the Argentine economy,” said Corujo.

Looking to the future until 2019, the analyst was convinced that “the worst has already happened, and the year ends in conditions of stable exchange rates, as well as a slightly declining interest rate.”

Topics

  • balance
  • stock market
  • dollar
  • Sandleris
  • central bank
  • SrFPKOP


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