The currency ended October at S/ 3,987, slightly above the end of September (S/ 3,984), according to data from the Central Reserve Bank (BCR), with which the forecasts of analysts to Management were fulfilled.
Thus, the dollar had a slight advance of 0.07% in the past month, although in recent days it reached S/ 4,002, the maximum of the year.
Despite this, Foreign exchange market specialists agree in estimating that the greenback will fall in November, due to a moderation in the upward trend of the US Fed’s reference rate.
The rises in the interest rates of the central banks, especially the tightening of the monetary policy of the United States, strengthened the dollar at a regional and local level, pointed out César Romero, head of Research at Renta4 SAB.
The demand for the US currency during October came mainly from companies, followed by foreign investors, while the supply originated in the AFPs, which continue to require soles to cover withdrawals of funds from affiliates, detailed an executive of the financial system.
Dollar and slowdown in US interest rates
A less aggressive Fed rate hike would put downward pressure on the dollar, as long as there is no additional catalyst linked to local politics that unbalances the exchange rate, he said.
According to Luis Eduardo Falen, head of Macroeconomics at Intéligo SABthere is a lot of expectation about the speech that Jerome Powell, president of the Fedat its meeting – this Wednesday, November 2.
Investors anticipate a 75 basis point hike in the US benchmark rate, but will be watching for announcements on the rate of hikes at upcoming meetings of the US central bank, he added.
Likewise, considers it unlikely that the exchange rate will exceed and continue above S/ 4 this month, since it would rather tend to fall. If the ceiling of S/ 4 is broken, there would be a rapid action by the BCR so that this peak is only momentaryhe added.
“The monetary policy of the US has been the main driver of the exchange rate, which was aggressive in its statements, although now the possibility that the Fed could take a break and help it to unravel ( moderate) a little the trend of the rate”, indicated a source of the foreign exchange market.
In this line, he estimated that the dollar would move between S/ 3.90 and S/ 4, something close to the upper part of that range at the beginning of November, although later the bias would be downward.
In addition to the constant intervention of the BCR, corporations and foreigners have bought many dollars, so their appetite to acquire the US currency above S / 4 would be less, he said.
For Romero, from Renta 4 SAB, the greenback could go back further and range even between S/ 3.85 and S/ 3.90. “In October, the main factors that moved the exchange rate were external, the local political noise is a constant in the last year”he pointed.
Specialists agree that the keys in November would be, especially, the Fed’s speech on its interest rate, and the market for raw materials, such as copper, as well as the outlook for the Chinese economy.
Stocks rise for the second month in a row
The General Index of the Lima Stock Exchange (BVL) rose 8.47% in October, rising for the second consecutive month.
The local market recovered last month triggered by actions in the financial sector, which rose 17.85%, said Marco Contreras, head of research at Strength SAB.
In addition, it moved along with the rebound of the New York stock market in October (8.1%), which recovered after giving up 9.21% in September, he specified.
In November, the market will be very attentive to external factors, such as the US inflation figures, the Fed meeting, the pace of interest rate increases and Powell’s speeches, he said.
The volatility would continue to accompany the Lima stock market, without signs of a clear trend, he added.