Investors Fear Behaviour of Argentina’s Domestic Economy

Financial problems faced by Argentina, which is negotiating with the International Monetary Fund (IMF) a new agreement for unpaid debt, are compounded by fears of new confinements in Europe due to the increase in cases of COVID-19. Political and economic uncertainty continues to weigh on the country, amid fears of the health crisis and possible decisions that could have implications for the country’s economy and impact on its fiscal deficit. Added to this is the absence of new signs regarding negotiations with the IMF that could take several months. Argentine risk prepared by JP.Morgan bank rose 17 units, to 1,417 basis points by 17:00 local time (2000 GMT), the highest since the beginning of last December.

Exchange rate CCL at the opening rose 3.3% and immediately fell to 1.8%, which undoubtedly shows that there is an official seller of bonds at 40% of the issue value which is 100%. Argentine bonds yield 16% or more, almost double that of countries like Pakistan, Cameroon or Iraq while they say that among the achievements is having resolved the issue of the debt. S&P Merval stock exchange in Buenos Aires was left with an improvement of 1.7%, at the provisional closing of 51,594.73 units, in line with the rise of Argentine ADRs in New York. Wholesale peso lost 0.13%, to 84.80/84.81 per dollar, with the intervention of the central bank since the opening and a slightly favourable balance in its exchange participation. A scenario of very low volume of operations, the usual private sources of the market estimated that the central bank had a small balance in favour. The alternative markets, the peso showed a decrease of 1.1% to 143.9 per dollar in the stock market ‘Contado con Liquidación’ (CCL), a loss of 0.8% to 143.5 per unit in the ‘dollar MEP’ of the Electronic Open Market (MAE) and a rise of 3.1% to 161 per dollar in the informal band. The measure comes at a time when soybeans are around $500 a ton, the maximum in six years.

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