Friday , April 16 2021

The dollar increased by 105.3% over the year, and the peso had the highest devaluation since 2002

No one expected the road to which the dollar was traveling during the year. Estimates by major economic consultants predict that the value of the US currency would be in December 2018 of 20 pesos. That figure was even within the budgets of the 2018 budget presented by the ruling party. The reality was very different. Weight experienced the worst devaluation since 2002 and the rise in the currency amounted to 105.3% during the whole year.

On the last day of the year, the dollar fell nearly 80 cents compared to the previous day to launch the weekend without activity in the markets of $ 38.84, with a reference interest rate close to 60 percent. The fall was strongly marked on the wholesale market, where the currency started the wheel to $ 38.20 and closed at $ 37.67.

The central bank quoted a buyer of $ 36.90 and a seller of $ 38.84 during the day this Friday, when on December 29, 2017, its price was 18.42 and $ 18.92 for both ends. In this way, the US currency has grown just over 105% during the third year of the management of Maurizio Macri, a brand that will be among the highest in national history.

Lower quote for the last working day of 2018.
Lower quote for the last working day of 2018.

The impact of the entry into force of the tax on financial tax and the country's risk to a maximum level in four years increase the participation of local uncertainty by the time of the year in which investors rearrange their portfolios. For example, on Thursday, the currency changed its original growth and closed with a 30 cents drop in the wholesale segment, while institutional investors have allocated dollars to deal with high-selling peso-bonds.

The causes of instability

The constant changes in the US currency were surrounded not only by the economic instability that remains so far, but also by the political changes it produces currency distortions. There were two changes in the headlines of the Central Bank, two agreements with the National Monetary Fund for monetary loans, radical changes in the government's physiognomy and a central adjustment policy that envisioned a deficit from zero for 2019 in the budget.

There were several reasons why the dollar doubled its value in 365 days. The first signs of a greater demand for the US currency occurred a few days before the 2017 change. On December 29, at a press conference, Chief of General Staff Markos Penya, Finance Minister Nicholas Dueven, and Former Officials Luis Caputo and Federico Sturzenegger changed "inflation targets" for 2018.

The measure was in search "relax" the monetary policy and to reduce the interest rate in pesos to stimulate economic growth. It did not work The dollar began to grow slightly in a bit, 20 pesos passed and slowly, the Central began to intervene on the market to avoid rising.

In May, the first critical situation took place. Mauricio Macri announced the government I will seek a loan with the IMF, in the midst of a fierce economic storm. The value of the dollar rose to 25 pesos in a few days, with a strong retention of Central, which at the time was led by Sturzenegger.

Little by little, the dollar continued with a bullish course. After the departure of Sturzenegger, the presidency of the Central it was in the hands by Luis Caputo. Within weeks, the currency has stabilized. But some mines produced by commercial tensions between Turkey, which caused a devaluation of the lira, caused greater instability.

Then, Makri announced a change in the financial program with the IMF. The dollar again rose by more than 34 pesos and it generates another devaluation influence in weight. Caputo left his position and entered Central Guido Sandleris, who in a couple of weeks announced a different system to prevent the rise of the US currency.

The central began to implement what is called the "flotation band" of the dollar, by which he placed a roof and a floor reference to the currency. In case of overcoming these figures, the Bank will intervene for buying or selling, as needed. Since this system has been established, so far, the value fluctuates between 36 and 42 pesosto complete the year with $ 38.85.

The entity also implemented another measure that was the one that allowed it to dry money on the market. The "Central Bank" vacuum so far allows, through daily tenders, to sell to financial instruments financial instruments called Lelik.

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