The Spread Hops Back on Stage

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The Spread Hops Back on Stage

First week
August 2020

By the end of last week, the dollar exchange rate in its MEP and Blue Chip Swap versions surpassed the 120-peso barrier again and closed with a spread over 70% against the official rate. This week, the market opened on the rise with BCS over 126 pesos to then go back to the 122 zone after the possible agreement with creditors hit the news. As we have already pointed out in other occasions, a spread this high is very hard for the economy since it creates all the wrong incentives. Underinvoicing of exports, overinvoicing of imports, more appetite for imported goods (with their price theoretically based on the official exchange rate) and with more dollar purchases corresponding to the USD 200 monthly quota. In June, 3.3 million people purchased them, and that number seems to have risen to 4 million in July.