RIO DE JANEIRO, BRAZIL – The third week of August will be shorter due to the August 17 holiday, which has been moved to Monday 16. However, this week will be one of news about the economy and there are expectations on what will happen on Tuesday when the markets open after the Central Bank’s decision to block blue chip swap operations in order to prevent asset laundering and tax evasion.
Dollar
Trading will be resumed on Tuesday, August 17, after the holiday.
On Thursday night, the Central Bank announced that from that moment on, the settlement of dollar bonds for the Electronic Payments Market and blue chip swap operations must be made directly into a bank account of the holder of those bonds and not in an investment or third party account.
On Friday, the dollar rose 17 cents to $102.53 -excluding taxes-, according to the average of the financial system’s main banks. At the same time, the retail quotation of the US dollar at Banco Nación rose 25 cents to $102.
On the other hand, the blue chip swap dollar fell and traded below target while the blue (parallel) dollar posted its highest daily increase in 7 weeks, rising $3.50 (+2%) to exceed $180. On Tuesday it will be possible to see if the upward trend continues or if the markets will be able to adapt to the new regulations.
Wholesale Price Index
On Wednesday, August 18, INDEC (National Institute of Statistics) will release the July 2021 wholesale price index (SIPM). In June, the price index overall level posted a 3.1% increase over May. In turn, the wholesale domestic price index (IPIM) accumulated 29.8% in the first half of the year and a year-on-year increase of 65.1%.
Construction Cost Index
On Wednesday, the July construction cost index will also be released, which measures the average evolution of the cost of private construction for housing in the city of Buenos Aires and 24 districts of the Buenos Aires suburbs.
It comprises 4 indexes: cost of private construction for housing, cost of materials, cost of labor and cost of general expenses.
Basic Food Basket
On Thursday, INDEC will release the monthly valuation of the Basic Food Basket (CBA) and the Total Basic Basket (CBT) for July 2021. This method of measuring poverty consists of establishing if households are able to satisfy, through the purchase of goods and services, a set of food and non-food needs considered essential, based on household income.
The method consists of using a Basic Food Basket (BFB) and expanding it with the inclusion of non-food goods and services (clothing, transportation, education, health, etc.) to obtain the Total Basic Basket (TBC).
The cost of the Basic Food Basket (CBA), which marks the threshold below which individuals fall into poverty, increased by 3.6% in June for a couple with 2 children who needed an income of about 28,413.82 pesos (US$293).
Meanwhile, the cost of the Total Basic Food Basket (CBT), which marks the poverty line, stood at 66,488.33 pesos in June, with an increase of 3.2% per month.
In the first six months of the year, the value of the CBA increased by 25.3%, while the CBT increased by 22.7%.
Monthly Economic Activity Estimator
Also to be released on Thursday, this indicator reflects the monthly evolution of the productive sectors’ economic activity at the national level. This indicator allows to anticipate the variation rates of the quarterly gross domestic product (GDP).
The last figure recorded is for the month of May, which reflected a growth in economic activity of 13.6% year-on-year.
With this last variation, activity accumulated an improvement of 9.5% over the first 5 months of the year. The sectors with the best performance were Industry and Commerce, which have posted 7 consecutive increases.