Wholesale dollar falls below $1.510 and the gap with the ceiling of the band holds at 25%

The wholesale dollar fell this Tuesday after rising at the beginning of the week and maintains a gap with the ceiling of the band of 25.3%, thus continuing to operate with relative calm and far from the ceiling of the exchange band. In the morning, the first selling points operated around $1.510, below Friday's close.

Thus, the wholesale exchange rate fell by 0.3% (-$3) to $1.508.5, which implies a gap of up to 5% with financial dollars.

The band scheme will also continue to adjust during September according to July's inflation. With a monthly update of 2.1%, the ceiling was set this Tuesday at $1.890.37 and is projected to reach $1.919.39 by the end of the month. The floor, meanwhile, is currently at $735.64.

In the first week of September, the exchange rate had accumulated a decrease of 0.3% and had ended at $1.508, with three consecutive sessions of declines.

The market sees less pressure but remains attentive to demand.

From Cohen, they noted that the market has stopped paying a high premium for exchange coverage and that the ceiling of the band is still too far to become an immediate operational reference.

However, they warned that the key lies in the supply of currencies. With a more limited liquidation from agriculture and still moderate purchases by the Central Bank, stability will largely depend on whether a jump in demand appears. In fact, according to estimates from the BCRA, there are $4.4 billion in corporate titles pending liquidation in the MULC, in addition to what is expected from agriculture that could generate a good flow of dollar supply for a semester that has been seasonally more complex in recent years.

In this context, the firm maintains a neutral bias regarding dollarization and, among financial alternatives, showed preference for CCL over MEP due to the gap between both quotes.

From PPI, they believe that September could present a more favorable flow scenario than August. Among the positive factors, they estimate that energy import payments could decrease by about $350 million compared to July and August levels. This could be complemented by new placements of corporate and provincial debt.

According to their calculations, the market could receive about $600 million from a San Juan issuance, $300 million from Tecpetrol, and about $500 million from YPF.

They also emphasized that the liquidation from agriculture, especially soybeans, still has room to sustain itself, given that there is a significant volume of merchandise pending commercialization.

The REM expects a dollar at $1.630 by the end of the year.

Market projections do not anticipate a sharp jump in the exchange rate for now. The latest Market Expectations Survey (REM) from the Central Bank placed the dollar at $1.530 for September and at $1.630 for December, which would imply a year-on-year variation of 12.6%.

For October, analysts expect an exchange rate of $1.565, while for November they project $1.600.

The market's attention will now focus on the upcoming inflation data. This Tuesday, the CPI of the City of Buenos Aires will be known, and on Thursday, INDEC will publish the national measurement for August. According to the REM, the consensus expects inflation of 1.7% for August and 1.8% for September.

This data will be relevant to assess whether peso rates continue to offer sufficient returns against inflation and the expected movement of the dollar. If the CPI confirms a slowdown, it could help sustain the attractiveness of carry and moderate the dollarization of portfolios.

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