2023-07-14 23:38:50
By Jorge Otaola and Walter Bianchi
BUENOS AIRES (Reuters) – Argentina’s financial markets fell sharply on Friday on persistent demand for dollars, amid the country’s delayed talks with the IMF and central bank reserve losses, just a month before the vote. primaries to choose presidential candidates for the October general election.
The informal or “blue” peso depreciated to a historic low of 525 pesos per dollar, losing 30 pesos in the week on fears of further price adjustments, at a time when inflation has risen to 115.6% in the 12-month accumulated until July.
“The unsophisticated investor tends to dollarize positions in the face of a completely challenging second half… The exchange rate scenario is challenging,” analyst Salvador Vitelli told Reuters.
The complex economic situation entails slow negotiations with the International Monetary Fund to make current targets more flexible and anticipate disbursements, in a week when the Ministry of Economy believed that a delegation would be in the United States, which did not happen.
“The difficulties in closing the renegotiation of the agreement with the IMF give no respite to the government, which finds itself in a highly vulnerable position, with reserves at critical levels and facing maturities and interest payments at the end of the month that must be paid immediately to avoid the default”, said the IEB Group.
Analysts estimate that the Argentine Central Bank’s net reserves register a deficit of 6.5 billion dollars, despite a recent agreement with China for an expanded currency swap and an active intervention with this alternative, together with a rigid exchange rate tightening by almost four years.
The interbank peso devalued by 0.25% to 265.00/265.05 pesos per dollar thanks to central bank interventions.
“The central bank’s firepower to keep the market in check is bottoming out. If a deal with the IMF doesn’t come soon, the situation could get even worse,” one trader says.
The “blue” peso fell 1.92%, to 522 pesos per dollar on sale as the last average value, and registered a low of 5.75% in the week, widening the difference with the official parity.
The S&P Merval index of the Buenos Aires stock exchange fell 1.74% to 443,303.6 points at the preliminary close, amid profit-taking, after shooting 4.54% on Thursday and registering its all-time high intraday at 452,626 ,18 points.
#Argentine #markets #gloomy #day #informal #peso #hits #record #pesos..