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Montevideo, June 19th 2019 - 08:57 UTC

 

 

Argentina's Peso takes a rest after a hectic week but the country risk shoots to its highest this year

Tuesday, April 9th 2019 - 09:59 UTC
Full article 6 comments
The Argentine Peso recovered slightly from a record low hit on Friday as political and economic uncertainty continue to put pressure on the currency The Argentine Peso recovered slightly from a record low hit on Friday as political and economic uncertainty continue to put pressure on the currency
IMF said the October presidential election was the “most visible near-term risk,” and could raise market anxiety and lead to larger-than-expected peso outflows IMF said the October presidential election was the “most visible near-term risk,” and could raise market anxiety and lead to larger-than-expected peso outflows

Latin American stocks were flat on Monday, partly subdued by delays in important pension reform in Brazil, while currencies in the region rose against a weak dollar but Argentina's peso hovered around record-low levels on political uncertainty and the highest country risk so far this year.

MSCI's index of Latin American stocks was little changed with stocks in Colombia's IGBC index leading gains. Sao Paulo-traded stocks rose for a third straight day led by shares of energy companies as oil prices hit five-month highs.

Brazil's Petrobras was among the top gainers after the state-controlled oil firm agreed to sell 90% of its Associated Gas Carrier (TAG) unit for US$ 8.6 billion to French utility firm Engie to helps cut debts.

Focus also remained on Brazil's social security reform, but investors are worried about a delay and changes made to the original pension reform promised by President Jair Bolsonaro.

An opinion poll by DataFolha released on Sunday shows Bolsonaro is facing the lowest approval rate for a first-term Brazilian president through 100 days among all elected predecessors since the country's return to democracy in the late 1980s.

Although the external environment is helping Brazil, focus is still on the political landscape, said Guilherme Foureaux, partner and portfolio manager at Paineiras Investimentos.

Argentina's peso recovered slightly from a record low hit on Friday as lower interest rates on peso-denominated bonds combined with political and economic uncertainty continue to put pressure on the currency.

The International Monetary Fund said although Argentina's economy would likely contract at a lower rate than previously forecast, the October presidential election was the “most visible near-term risk,” and could raise market anxiety and lead to larger-than-expected peso outflows.

The IMF's executive board ratified its third review of Argentina's economic progress under a major financing deal agreed last year, unlocking a roughly US$ 10.8 billion tranche of funds.

The Argentine stock exchange index Merval was up 1.3% pushed by financial and energy shares, but the country risk ballooned 21 points to settle at 803 points, its highest since last December and not far from the record 840 during the current administration of president Mauricio Macri.

Top Comments

Disclaimer & comment rules
  • Enrique Massot

    There are diverse theories about the motivation of president Mauricio Macri to be pushing Argentina to the abyss. Some say it's pure incompetence; others say it all was a mean plan to make as many friendly business operations as it was humanly possible in four years, then take the loot and run.

    Others say it was but a mix of greed and clumsiness and that may very well be true. Add to that a serious attempt to put the opposition Peronist in disarray through dozens of fake judicial processes and systematic press attacks carried out by friendly media outlets.

    Now the whole strategy is about to crumble, as revelations of an extensive network of judges, prosecutors, journalists and intelligence agents continue to surface and involve high-level officials.

    Many Argentines are now looking forward to cambiar Cambiemos for something else.

    Apr 10th, 2019 - 03:50 am 0
  • :o))

    Selling Argentina [+ maybe many South American Countries] - State-by-State - may benefit ALL concerned?

    Apr 10th, 2019 - 03:18 pm 0
  • Enrique Massot

    @ Skull

    You may not know that a good part of Argentina has already being sold off in more than one way. The government of Mauricio Macri has relaxed controls over foreigners property buying, and as a result a large part of Patagonia and other regions now belong to foreigners.

    Additionally, the rumour mill purports that an offensive (the notebook photocopies) against large construction and public works companies may just be trying to allow firms from the US and others to enter the market.

    And of course, the largest sell off of all is to go beg the IMF for some currency, which instantly delegates Argentina's economic decisions in a foreign agency, in a duplication of sorts of the Greek experience.

    So, no need to advertise -- we have already being sold!

    Apr 10th, 2019 - 05:47 pm 0
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