The dollar in Uruguay weakened strongly in the operations of this Wednesday (-0.47%) and Thursday (-0.51%) and returned to the $40 range in the wholesale market. The average of transactions this Thursday was $40,765, while the last trade of the day was agreed at $40.60, this is 0.85% below the previous closeaccording to data from Bevsa.
In the board to the public of the BROUthe US currency lost 30 cents to $39.40 for purchase and $41.80 for sale.
In so far in october and when there are two operations left to close the month, the dollar accumulates a fall of 2.3% compared to the last operation in September ($ 41.73). so far this year, the dollar depreciated 8.8% against the Uruguayan peso.
In the Brazilian foreign exchange market, the dollar also fell in October, although to a lesser extent (-0.8%) than in the Uruguayan market.
CPA analysis
The consulting firm CPA Ferrere does not expect an appreciation of the exchange rate in the short term in Uruguay to the extent that the Central Bank (BCU) will maintain its contractionary policy (raising the interest rate) to anchor inflationary expectations. In agreement a presentation on analysis of the situation presented by the economists Alfonso Capurro and Gabriel Oddone this Wednesday, in 2022 the strengthening cycle of the dollar was consolidated at a global level, reaching maximums of the last 20 years. However, the Uruguayan peso was decoupled from this trend and appreciated against the US currency so far this year; in Brazil this appreciation was 4.9% and 3.2% in Mexico.
The consultant estimates that as of March 2023, inflation would fall (below 8%) so that monetary policy could adopt a buffer role, creating room for a moderate reversal of the real exchange rate (RER). In this sense, he considers that from the second quarter of next year (April-June) monetary policy could become less contractionary, although in a context of low credibility, the BCU will wait for downward signs of inflation to evaluate a possible turn in its monetary policy.
CPA understands that the BCU could maintain a contractionary instance in 2023 if the external shock is transitory and moderate. On the other hand, if the external shock deepens, imported deflation (lower prices) will create room to lower interest rates before the end of the year.
The consultant plans a depreciation of the Uruguayan peso against the dollar of 8% by 2023 In uruguay.
