Argentine Stock Market Sees Clear Upward Trend as Dollar Falls from Record High

2024-07-19 23:12:00

The dollar fell free from its record of $1,500 last week.

The IS There was a clear change in the Argentine stock market with a clear upward trend This Friday, in line with the announcement from the Central Bank of Conradh na Gaeilge agree with financial entities 13.17 trillion pesos – equivalent to USD 14,240 million at the official exchange rate – were terminated in contracts for liquidity options (“puts”) to eliminate another source of possible monetary expansion.

The initial index S&P Merval of the Buenos Aires Stock Exchange gained 2.6%, to 1,569,019 pointswhich ended the week with a decrease of 8.5% in pesos, and the decrease in sovereign debt prices combined with country risk close to 1,600 basis points.

Until now, banks had the possibility to sell bonds to the BCRA if their value fell below a certain level, which works as an insurance (put) to avoid loss.

As a result of the ongoing operation, related to the elimination of the risk at risk with 78% of the contracts, the BCRA paid 90,000 million pesos to the financial entities, since the repurchase offer was linked to the payment of the premiums that the banks were facing at this moment. Get insurance updated for inflation.

Among the ADRs and shares of Argentine companies traded in dollars on Wall Street, profits were returned, led precisely by Irish banking papers. Banco Macro (+4.2%) and Banco Supervielle (+3.2%).

Source: Rava Bursátil-prices in dollars.

“One of the biggest bombs that was ‘put’ by the banks has been defused (…) We come here to lower inflation and lower taxes. To that end, it is necessary to close all monetary taps,” said the Minister of Economy, Luis Caputoin statements to the news channel LN+.

The Government has promised to stop expanding its monetary base as part of the policy it chooses Javier Miley to fight inflation still close to 300% per year.

This decision played against business in stocks and bonds, since there was a lower capacity to collect reserves in dollars and a reduction in pesos in the market that could affect economic activity.

The new plan shows that the Government is clearly prioritizing the fight against inflation over the overvalued sector, which will make it even more difficult to rebuild foreign exchange reserves. “This is a cause for great concern since Argentina will face large payments in foreign currency early next year,” said a report from the consulting firm. Capital Economics.

In this regard, the prices of the sovereign debt operated in the Electronic Open Market (MAE) expressed some doubts about the outcome of the path with hidden “endogenous dollarization”, according to economists, with an average drop of 0.4% in pesos. he risk country of JP Morgan increased six units for Argentina, sa 1,590 points basics at 5:50 pm

The IS Congressional Budget Office He said that debt maturities between July and December in local currency totaled 37.46 trillion pesos and in foreign currency they are estimated at 14,524 million dollars.

“There will be a lack of pesos in Argentina because more is not issued and because of the primary surplus we are contracting at a rate of 1 billion or 1.5 billion pesos per month. The peso market is going to balance and in competing currencies. , the peso is the strong currency,” Caputo said.

In a volatile wheel, in which the free dollars hit a floor of $1,430, the currency closed available this Friday at $1,445 for sale, with a drop of 10 pesos or 0.7 percent. With a wholesale dollar that rose two pesos to $927.50, the exchange gap remained at 55.8 percent. Likewise, in the first week of the new “zero emissions” monetary scheme launched by the Ministry of Economy, the “blue” dollar fell 55 pesos or 3.7% from its nominal record of 1,500 pesos recorded the previous Friday.

he BCRA had to sell USD 106 million last Friday to meet the needs of the market, its largest cash sale since June 24 last. BCRA sources indicated that the sales were due to energy payments.

Meanwhile, the reservations international markets decreased by 42 million USD, USD 27,566 millionminimum since March 27 (USD 27,146 million).

The Government authorized the issuance of a Liquidity Tax Letter (LeFi) for one year, for a nominal value of up to 20 trillion pesos (USD 21,650 million at the official exchange rate), which will capitalize daily interest with negotiations between the BCRA and financial entities, and will set the reference rate of Argentina starting on July 22 .

Market operators consulted Reuters They do not rule out an improvement in rates, which is why interbank loans rose this Friday to 41.5/43.5% annual, from 40.5/42.4% the day before, with fixed terms rising to 35% annual , against a previous average of 32%.

A BCRA source indicated that LeFi will take place on Monday at the 40% rate which is the current market reference rate. The monetary authority cut its lending rate to a nominal 48% annually on Thursday, from 60% previously.