Last Friday the dollar reached 10 consecutive lows in Uruguaywhich meant the longest streak in two years, given that since the end of 2019 there had not been such a long period of depreciation of the North American currency.
According to the newspaper El País of Uruguay, although yesterday the currency cut that streak by closing the day with a slight rise of 0.1%, in the month the dollar accumulates a fall of 2.51% and 3.69% in the year.
On February 8, the Union of Exporters of Uruguay (UEU) met with the authorities of the Central Bank (BCU) to ask them for “some kind of signal” so that “this abrupt fall” of the dollar is not allowed.
The concern of the export sector lies mainly in the fact that the persistent decline in the dollar affects industrial companies to a greater extent, which are more labor-intensive and which, in turn, are the ones that have not yet managed to overcome the impact economics of the pandemic.
María Laura Rodríguez, responsible for economic advice, communication and the environment of the UEU, explained that all exports cannot be put in the same bag, because the realities are different. As each exported dollar is exchanged for less Uruguayan pesos, this negatively influences those exporting companies whose costs are mostly in national currency.
“The decline is being too drastic. Not all companies are having high international prices, not all have achieved a homogeneous recovery and not all have all markets open. There are many exporting companies that are trying to survive and overcome the slump that was 2020 ″, she remarked.
“There are some instruments that the BCU can use to stop this fall that worries us a lot. You have to act in real time and not wait for it to fall a lot because then recovery is not easy, ”he added.
In response, the BCU authorities responded to the export union that is “monitoring” the situation.
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The vice president of the Uruguayan Chamber of Tourism (Camtur), Francisco Rodríguez, reported that, in the tourism sector, reality is also worrying because it adds to the “complex situation” facing the activity. According to the union, the drop in the dollar “weighs” in the sector, although mainly in the hotel sector, which has seen a “sharp drop” in the level of reserves.
“When you had rates in dollars, the ideal is for the currency to rise. In addition, this logically influences at the regional level because although there have been attempts to seek economic mitigation benefits, we are always looking at how expensive or cheap we are compared to Argentina,” said Micaela Camacho, economist and director of the University’s Competitiveness Institute. Catholic.
As it is a highly dollarized economy, the drop in the US currency also has effects in terms of domestic consumption. In this sense, Camacho told El País that the drop “will have a direct impact on consumer expectations.”
Consumption could be affected mainly in imported goods since they are the ones that depend directly on the dollar. “When the price drops, demand increases, especially in purchases that are not very well thought out,” explained Camacho.
Source: Larepublica
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