What has happened is that the external context has taken a full turn. The global economy has begun with its recovery generating confidence in investors that the worst of the crisis has already passed, the storm has finished and have started to receive the first rays of Sun. Investors then have left their trenches and are spreading your dollars all over the world. To the above to add that the dollar itself has weakened against almost all major currencies in the world and Latin America. If you would like to know more then you should visit Tobias Menzies. It is the relative weakening of the dollar which explains part of the pressures that receives the Argentine peso to be strengthened.
Recomposition in part of the flow of export revenues has given strength to the supply of foreign exchange in the market, while the recession which passes through the Argentine economy feels from the side of the demand for Foreign Exchange product of the sensible drop in the volume of imports. For the Government, the strengthening of the Argentine peso is bad business. The need for fiscal resources welcomed to the dollar to continue its process of gradual strengthening against the Argentine peso. A U.S. currency to $4 by the end of 2009 was a good result for both the Government and for those who are in charge of monetary policy.
With the new picture of situation, the best result that the Government can achieve is to keep the dollar at the current level, but the market bet that this will not happen if Argentina has bad luck (in terms of value of its currency) to succeed in returning to the markets. Commented Javier Blanco in the nation, as the analyst of emerging markets of RBC Capital Markets Nick Chamie had recommended from Toronto to bet on the Argentine peso speculating that it will strengthen up 4.5 percent against the dollar in the next 3 months if the Argentina return to the markets. The BCRA will return to combat the pressures of the exchange rate appreciation as it has been doing until the beginning of 2008. Again the sustainability of the intervention policy will depend on the ability of sterilization that has the Monetary Authority without incurring a quasi-fiscal deficit. Argentina returns to show interesting returns in dollar for investors and that’s bad news because it generates the pressures listed on the exchange rate. Fortunately, the institutional instability and the poor driving of the economic policy of Argentina will make doubt on whether investors trust in the country.