Confidence crisis hits Argentina markets again

Confidence crisis hits Argentina markets again

Pedestrians in the financial center of Buenos Aires

© Reuters / Marcos Brindicci
Pedestrians in the financial center of Buenos Aires

BUENOS AIRES, Oct 15 (Reuters) – Argentina’s sovereign bonds were down again on Thursday as the peso continued to lose positions against the dollar and stocks rose on hedging amid notorious mistrust of investors faced with doubts about the future of the third largest economy in Latin America.

“The disarming of positions, especially from external funds, continues to pressure the falling prices in the face of an unfavorable technical position,” said Gustavo Ber, economist at Estudio Ber.

He added that “both local and IMF signals are far from calming operators’ concerns about the drainage of reserves and the dynamics of ‘gaps’ (exchange rates) that are already over 100%.

The look of the International Monetary Fund (IMF) synthesizes the challenges of the Government, with recession, fiscal deficit, complex social condition, expansion of the exchange rate gap, high inflation and massive contagions by COVID-19.

IMF chief Kristalina Georgieva said Wednesday that the most important task for Argentina is to draw up an agenda that balances its complex economy.

* Sovereign bonds in the OTC market ended with an average drop of 1.2% on average, thus accumulating a loss of 3.8% in the last three business sessions. The referential title ‘Bonar 30’ ended with a drop of 1.4%.

* “Bonds suffered a punishment not often seen in newly restructured products and at these levels risks appear skewed to the upside,” the SBS Group said in a report.

* The country risk remained stabilized in the area of ​​1,403 basic points around 5:00 p.m. local time (2000 GMT), after reaching 1,443 points prior to the opening of the market, being the highest since September 10 when the index was modified with the new bonds after a sovereign debt swap for about 100,000 million dollars.

* The wholesale peso closed stable at 77.47 / 77.48 per dollar with the persistent regulation of liquidity from the central bank after generating a slightly bullish opening.

* “Private market sources estimated that today’s negative balance for the central bank was in the order of 50 million dollars, approximately”, Gustavo Quintana, operator of PR Corredores de Cambio.

* Traders do not rule out that the central bank’s board of directors will introduce changes in the rate levels again at its meeting today.

* On the other hand, the peso in the informal market depreciated a strong 2.34%, to 167/171 units per dollar, after setting a historical low of 172 for intraday sales. The gap with the interbank market jumped to 120.7%.

* “What would most calm the pressure on the exchange rate would be to have more details about the future of the economic course. Not in the very short term, but it does allow to anchor expectations so that the market can draw numbers with something concrete on the table “said the brokerage Portfolio Personal Inversiones.

* In other exchange variables, the ‘Cash with Settlement’ stock market (CCL) was at 167.2 pesos and in the Electronic Open Market (MAE), the ‘MEP dollar’ was traded at 155.5 units.

* Traders estimate that the central bank would be selling bonds from its portfolio in an attempt to stop the rise of the dollar in the alternative markets with the consequent fall in the value of the securities.

* For its part, the S&P Merval index of Buenos Aires grew 2%, to a provisional close of 48,239.27 points, thus accumulating an improvement of 17% in a string of ten consecutive rising wheels.

* Market specialists agree that the stock market is leveraged by the CCL, a mechanism by which assets are bought in pesos and settled in dollars abroad, protecting portfolios from Argentine risk.

(Reporting by Walter Bianchi ,; Edited by Jorge Otaola)


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