Argentine Assets Stay in the Red as Parallel Dollars Decline

Argentine Assets Stay in the Red as Parallel Dollars Decline

The escalating political crisis in Argentina, caused by a setback of the Omnibus Law in Congress and tension between the National Government and state governors, has negatively impacted Argentine assets. Following Wednesday’s decline, stocks and bonds remained in the red. The Merval index fell by 3.5% and the country’s risk level increased.

Parallel dollars were less in demand on the exchange market, especially after various public statements made by the Minister of Economy, Luis Caputo, regarding the near future of the economy.

On the street, the blue lost $25 and dropped to $1,145. The prices on the stock market also showed a downward trend. The MEP dollar fell by 1.3% and ended at $1,183; the cash with liquid, which companies use to dollarize, fell by 1.4% and settled at $1,246. This means that the ticket remains the cheapest “free” quote.

On Wednesday, it was highlighted in the city that the reaction of financial dollars to the withdrawal of the Bases Law had been “moderate.” “This dynamic seems to confirm that in the short term, the gap appears to have reached an equilibrium level of around 50% which seems to be the “center of gravity” in the current macro-financial situation,” they indicated in Delphos.

The market is closely watching the Central Bank’s ability to buy dollars to rebuild its reserves and the signs of updating its daily devaluation rate.

The organization chained a new round of purchases and kept another US$ 99 million as a result of its interventions in the exchange market. In this way, it has already accumulated purchases of US$ 603 million since the beginning of the month. “February appears as a positive month for the Central Bank but to a lesser extent due to greater activity by importers,” they warned in Delphos.

However, these purchases do not translate directly into the central coffers. Since last Thursday, BCR reserves have lost US$1.2 billion. This Thursday, they fell US$35 million and closed at US$26,446, in a wheel where both the yuan and gold moved downward. So far this month, they have fallen primarily due to debt payments.

The ambiguity in political decisions regarding the direction of the economy has a significant impact on the price of shares, which had been presented as an anti-inflationary haven in the first month of the year. The Merval index ended in red for the fourth round in a row and all the companies listed on it closed with negative results.

Similarly, sovereign bonds ended lower across the entire curve.