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The price of the dollar closed with a sharp fall this Tuesday in line with the positive behavior of international stock markets and the global decline of the currency, given the general expectation of the markets for the result of the presidential elections in the United States, in which, if the favorite Joe Biden wins, it would imply a severe increase in fiscal spending that would increase the supply of foreign exchange.
The US currency ended operations with a decline of $ 13.28 to a selling point of $ 755.10, which placed it at its lowest level since January 2.
Thus, in two days it accumulates a drop of $ 18.94, while in the year it falls $ 1.07 and since its historical maximum of March 18 it has fallen by $ 113.50.
The decrease in the exchange rate in the local market has also been explained by the advance in Congress of the bill for the second retirement of pension funds from the AFPs, which, if approved, could imply a massive liquidation of dollars by the administrators.
At the international level the dollar index, which measures the US currency against a basket of six liquid currencies, including the euro, fell 0.82% to 93.66 points, marking its biggest daily drop since the end of July.
Biden is also expected to adopt a more liberal trade approach, which would weaken the dollar against other currencies.
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“In the case of a Democratic victory, at least that effect would be seen in 6 months, at which point the effect of the fiscal impulse would be balanced with the announced tax and regulatory burdens. The dollar should weaken, more or less strongly depending on these scenarios”Credit Suisse’s head of investment advisory for Latin America, Ricardo Castillo, told Pulso.
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According to CincoDías, analysts believe that the US currency, which is 9% below its March highs, will not rise regardless of who wins in the presidential elections.
However, what analysts agree on is that the triumph of any option is clear and does not give rise to doubts.
“The markets are looking at a Biden win, certainly a clear result, and they want a clear and unopposed result,” said Michael Hewson, CMC Markets chief market analyst.
“More than the definition, what worries more is to have the results as soon as possible, since many Americans already voted by email. Donald Trump commented that he did not trust this form of vote, so if the result is not favorable, the official result could be delayed due to the new revisions to the system, ”said Carlos Quezada, senior analyst at Libertex.
“This will be one of the most significant presidential elections in the history of the country, where the electoral campaign has been particularly tense due to the coronavirus, and the immediate aftermath due to fears that a period of uncertainty around the result could weigh down the markets” , said Francisco Román, market analyst at XTB Latam.
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