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Montevideo, October 17th 2018 - 03:41 UTC

Black Friday for Argentina: dollar climbs 3.86% and sovereign credit risk reaches 700 points

Saturday, August 11th 2018 - 09:13 UTC
Full article 3 comments
The Argentine peso, which has lost almost 40% since the start of the year, was trading at 29.25 per U.S. dollar at the end of the day on Friday The Argentine peso, which has lost almost 40% since the start of the year, was trading at 29.25 per U.S. dollar at the end of the day on Friday
Argentina’s dollar denominated sovereign debt spread widened by a whopping 69 basis points on Friday to 701 according to JPMorgan’s EMBI index Argentina’s dollar denominated sovereign debt spread widened by a whopping 69 basis points on Friday to 701 according to JPMorgan’s EMBI index
Furthermore a plunge in the Turkish lira rocked emerging markets, sending investors scurrying for safety in assets such as the yen and U.S. government bonds Furthermore a plunge in the Turkish lira rocked emerging markets, sending investors scurrying for safety in assets such as the yen and U.S. government bonds

Argentina’s peso closed down 3.86% on Friday and the stock market ended 1.44%, pressured by emerging markets turmoil, particularly in Turkey, and a corruption scandal that has touched some of the country’s top business leaders, traders said.

 Local daily newspaper La Nacion last week published the content of what it said were notebooks kept by a driver employed by the former government that detail how he transported bribe money from construction companies to government officials from 2005 to 2015. More than a dozen arrests have been made as the scandal spreads.

The peso, which has lost almost 40% since the start of the year, was trading at 29.25 per U.S. dollar at the end of the day on Friday. Argentina’s Merval stock index opened 3% lower but went on to erase about half of its losses.

Argentina’s dollar denominated sovereign debt spread to comparable U.S. Treasuries widened by a whopping 69 basis points on Friday to 701 according to JPMorgan’s EMBI Global Diversified index. That marked the biggest yield gap for Argentina since February 2015 and the sharpest daily move of any emerging or frontier market country on Friday.

Likewise call money among the leading banks zoomed on average to 55%, but in a very volatile market finally ended the trading day at 48%.

Investors have shunned Argentine assets this year over worries about the country’s economy, sparking a run on the peso. The corruption scandal, as well as general investor flight from emerging markets on Friday, exacerbated the fall.

Furthermore a plunge in the Turkish lira rocked emerging markets, sending investors scurrying for safety in assets such as the yen and U.S. government bonds. The lira has fallen on worries about Turkey’s economy, lack of action from policymakers and a deepening rift with the United States.

“The lira is getting vaporized and that’s dragging down other emerging market currencies,” Nery Persichini, an analyst with Buenos Aires brokerage GMA Capital, tweeted.

The corruption investigation in Argentina will have a negative impact on the country’s economic growth, an official with the Fitch credit ratings agency said on Thursday.

Top Comments

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  • falklandlad

    Macri might be down in the polls and struggling, but he is far from beaten.

    Aug 11th, 2018 - 02:39 pm 0
  • chronic

    Reeeeeeeeeeeeeeekie:

    At some point one will be able to accurately assess the old adage that “it isn't worth two cents”.

    Macaroni has accomplished little.

    He was left a wonderful hand to play by la cretina.

    The oozing slime that he was required to wade into at inauguration has proven intractable - just as all predicted.

    Conversely, CFK's vindication of charges as self proclaimed prior to abdication remains just as assuredly - elusive.

    Rg society is crippled by an absence of two critical resources - integrity and accountability.

    Aug 11th, 2018 - 01:14 pm -1
  • Enrique Massot

    The size of the distraction devices implemented by the Argentine government shows the dimension of the crisis that it seeks to cover.

    President Mauricio Macri blames the U.S. interest taxes, the Turkish lira, the notebooks (well, photocopies) in an effort to delay the inevitable – however, the deterioration of the real economy is felt by Argentines every day.

    That is why today’s disapproval rates of the government are soaring to 62 per cent, while 70 per cent of Argentines say they are worse off than a year ago in an opinion poll published today by Clarin.

    The sad reality is that a group of entrepreneurs who did not have a plan other than filling their own pockets is taking the country to a crisis that may dwarf that of 2001.

    Of course, chronically misinformed commentators such as one above are beginning to change tone, still blandly attempting to tarnish a government that ceased almost three years ago for today's debacle.

    However, the same commentator offers us the key to understand the problems of “Rg society.” It is, he says, ”crippled by an absence of...(sound handpans, marimbas and glockenspiels) integrity and accountability.”

    No s.....t!!!

    Aug 13th, 2018 - 07:44 pm -1
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