Let Everything Be Done in the Name of the Dollar

Obstacles to Foreign Exchange Transactions Would Continue for Many Months

Is the sensation of a rainbow after a storm real? The second half of December was a kind of balm for the financial system. The question, of course, is whether this “calm” will continue or if it is just a matter of circumstance.

The period of tension that began in October and was exacerbated in November seems to have entered a dead calm. Peso deposits are growing, reserves are beginning to increase, the demand for the dollar is very contained and its value is determined more by the informal markets. Even some foreign exchange positions were “disarmed” to pay Christmas bonuses and vacations. And even the rate began a slight downward trend.

The only thing that sticks out like a sore thumb is the famished stock prices. Investor fear, in this case, has a first and last name: dividends — or the failure to pay these, really. This seems to be true especially in the case of local businesses with American depositary receipts in the United States. In these cases, it’s obvious that the failure to pay dividends and even the comments of top officials regarding the best investments to transfer profits (currency) overseas are, at least, among the main reasons to avoid buying risky assets, despite the fact that prices are extremely tempting to those that are able to keep them in their portfolio between 12 and 18 months.

This reasoning “partners” very well with the strong limitation on imports of any kind of goods, which can be seen in the drop in the number of foreign trade operations. It can also be seen in the request to “leave for later” the purchasing of products overseas. That is, of course, at least until the bulk of dollars comes in for agricultural exports.

But due to the government’s substantial shareholdings, some experts ask: How much money would the Treasury pocket if dividend payments were pushed? For now, the need for dollars wins.