Financial Risks in Argentina Deepen coupled with investment. The 22nd of July, 2016 (Reuters) – In the most recent week of bad financial news driven by a damaged currency, Argentina’s debt plunged further into troubled territory on Friday, underscoring rising concerns about the near-term prospects for Latin America’s third-largest economy.
Daily record lows for the peso were reached this week. On Friday, private traders reported that the currency was selling at roughly 350 pesos to one dollar on the parallel black market, down about 4% from the day before.
Despite rates on the benchmark Bonar 2030 bond exceeding 40% after its value fell 2.1 percent, so-called over-the-counter sovereign debt fell 1.1 percent overall on Friday due to persistent market concerns. Also, know about how US Equity Funds Report Their Largest Weekly Outflow in Five Weeks.
One broker said, “The bonds are nearing default levels.”
On the political front, poor luck made matters worse when the White House postponed a meeting between Argentine President Alberto Fernandez and U.S. President Joe Biden slated for next Tuesday as a result of the former leader’s recent COVID-19 diagnosis.
Despite her pledge to uphold the nation’s existing debt agreement with the International Monetary Fund, newly appointed Finance Minister Silvina Batakis has so far been unable to soothe uneasy markets (IMF).
According to a BTG Pactual research note released on Friday, “the government is attempting to do the absolute minimum to retain the IMF deal, displaying some budgetary discipline, a cautious rate rise, a quicker depreciation speed, greater financial repression, and import restrictions.”
The administration revealed on Thursday a proposal to let foreign visitors convert dollars at a considerably greater rate than was previously possible in an effort to increase decreasing U.S. dollar reserves. View More
Much of the hard money that visitors bring in never make it into central bank coffers because of a growing difference in exchange rates from the official, strictly regulated rate.
The black market exchange rate for US dollars is now more than two times higher than the official rate in pesos which also defines the Financial Risks in Argentina.
