The Argentine peso climbed on Tuesday after the Central bank implemented a raft of measures to stabilize the volatile currency on Monday, including increasing the benchmark interest rate to 45% from 40% previously, and announcing it was offering markets US$ 500 million.
At the end of trading, the US dollar which earlier was selling at over 30 Argentine Pesos, ended some 30 cents lower at an average 29.61 Pesos. Anyhow the market was nervous and volatile.
Likewise of the US$ 500 million dollars made available, the central bank finally awarded some US$ 200 million, also helping to decompress markets.
In the stock exchange the Merval indicator rebounded 1.8% reaching 26.536 units, in line with other emerging markets as the Turkish Lira after a three-week drubbing, pulled out of a nosedive following on a raft of measures and announcements from Ankara's finance minister sought to reassure investors.
Economist Gustavo Ber said that global relief in emerging markets was immediately taken advantage by Argentine domestic assets eager to recover after the bashing from previous days, even when investors are expecting the implementation of more severe measures to normalize the country risk index, which is considered crucial to recuperate external financing. On Monday the Merval had plummeted 3%.
Argentina's sovereign debt risk also recovered on Tuesday falling by 52 points, almost 7%, to 696. Nevertheless the level is well beyond normal and closer to February 2015 levels.
On Monday the country risk had ballooned 6,9% to 748 points as a consequence of the ongoing probe into corruption involving ex officials and the leading public works contractors, during the Kirchner couple years in government.
Overall Latin American equities mounted a second day of a comeback on Tuesday as the region shook off the impact of panic selling in Turkey's lira, while the currencies of Mexico and Brazil rebounded.
Brazil's real and Mexico peso both rose sharply alongside the Turkish Lira, but currencies in Colombia, Peru, and Chile all slipped.
A return to volatility cannot be ruled out if the Turkish lira starts losing against the dollar again, Mexico's Banco BASE said in a note to clients.
Brazil's benchmark Bovespa index climbed 1.4% while Mexico's S&P/BMV IPC rose 0.67%.