The US Dollar’s Crucial Week: Argentina’s Economy in Focus
The End of “Dólar Soja 4”
As the “Dólar Soja 4” measure comes to a close, the US dollar is on the brink of a significant week. Despite the success of this initiative, which has kept financial dollars stable, the Argentine Central Bank (BCRA) has been unable to accumulate reserves. Over 70% of the reserves were committed to bond intervention. This week, speculation emerged that the Argentine government might need to extend the “Dólar Soja 4” measure to secure more dollars. However, this has been denied by the government. As a result, analysts predict an increase in dollarization pressure.
Impact on the Foreign Exchange Market
In the foreign exchange market, $110 million was liquidated by the agricultural sector, while the BCRA made net purchases of $1 million. The BCRA’s accumulated balance for September is positive, amounting to $516 million. However, gross international reserves have decreased by $48 million, resulting in a gross stock of $27.202 billion. This represents a decrease of $17.397 billion throughout 2023.
Anticipated Rise in Exchange Rates
The end of the “Dólar Soja 4” measure this week is expected to result in a rise in exchange rates due to a lack of dollars accumulated in September. The market is keenly awaiting signals from the government about its next steps. Financial expert Salvador Di Stéfano predicts the dollar bill will rise above $1,200 by the summer. In addition, analyst Gustavo Ber anticipates a resumption of the readjustment of financial dollars, alongside intensified interventions to contain pressures toward coverage.
Global Pressure on the US Dollar
Globally, the US dollar is at a ten-month high as Treasury bond yields reach their highest level since October 2007. Comments from Fed Chair Jerome Powell about the possibility of continued monetary tightening by the Federal Reserve are putting pressure on emerging currencies. This situation, coupled with high US bond yields, increases the cost of financing for Argentina, reflected in the country’s risk premium.
The end of the “Dólar Soja 4” measure and the upcoming general elections in Argentina have created increased tension in the market. The government’s next steps will be crucial in determining the future of the dollar and the Argentine economy. As the global economy continues to react to various factors, including the Federal Reserve’s potential actions, the situation remains fluid and uncertain. Therefore, investors, analysts, and economists worldwide will be closely monitoring the developments in Argentina in the coming days and weeks.
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