December 6, 2023
Argentina’s black market peso falls after Miley’s win;  local shares rise

People walk on the street in Buenos Aires, Argentina on November 20, 2023, a day after Argentina’s presidential election. Reuters/Adriano Machado acquires licensing rights

  • Argentina’s domestic markets reopen after bank holiday on Monday
  • International bonds, US-listed stocks surge on post-election rally
  • US-premarket signals point to more equity gains

LONDON/BUENOS AIRES, Nov 21 (Reuters) – Argentina’s black market peso fell nearly 10% to more than 1,000 per dollar on Tuesday after a moderate favoring dollarization won the country’s presidential election, while stocks and bonds fell on tighter economic policy. Jumped in anticipation.

Argentina’s local markets reopened after a holiday on Monday, giving a clearer idea of ​​how investors will react to the victory of radical liberal outsider Javier Meili in the weekend’s presidential election.

Miel wants to cut state spending, abolish the peso currency and close the central bank.

The local S&P Merval stock index (.MERV) was up 20% as shares of state energy firm YPF (YPFD.BA) rose nearly 40%, matching a sharp rise in its US-listed stock. The business took place a day earlier, with Miley hinting he may privatize the company.

However, Miley’s dollar plans put pressure on the crisis-hit peso currency, which is governed by strict capital controls. The official exchange rate is around $350 per dollar, but dollars trade for more than double that on popular parallel markets.

International bonds were rising for the second consecutive day on Tuesday, with gains of 0.6 cents and issues bid between 29-34 cents, MarketAccess data showed. Traders said local bonds were also up.

Miley is promising an economic jolt to the long-troubled economy, as the overvaluation of the peso is seen at the center of the country’s economic struggle. There is a big difference between the official rate and how it is traded on the streets.

Morgan Stanley analysts said Monday they expect it to fall 80% over the next six weeks. Miley said that before the elections he wanted to completely abandon the peso in favor of the dollar.

“Given Miley’s comments before the election, the big question is what will happen to the currency now,” said Victor Szabo, emerging markets portfolio manager at Aberdeen in London.

“The black market is far from the official rates so some adjustment is needed. The issue is how quickly it happens.”

peso trade

One of the few ways that both local and international people have been able to trade pesos in the last 48 hours is in the cryptocurrency market, which trades 24 hours a day, although in smaller volumes than traditional foreign exchange.

One Tether – a cryptocurrency pegged to the US dollar – was trading up 1% on the day at 960.3 pesos, according to crypto exchange Binance’s website, although that was a far cry from the pair’s high of 1,120.4 seen on Sunday. .

On equities, pre-market US trading data indicated the Global , which was its highest level since early September.

The fund’s net assets rose $6 million on Monday to $61.9 million, according to LSEG Lipper data, although the vehicle showed outflows.

US-listed shares of Argentine banks, known as “depository receipts”, also rose. Banco Grupo Supervillain was signaled 3.5% higher after the stock as well as other banks such as Banco Macro, Banco BBVA Argentina and Grupo Financiero Galicia closed between 17-24% higher on Monday.

Miley, who will take office on Dec. 10, did not mention “dollarization” in his maiden speech, raising questions about how soon he might try to eliminate the peso altogether.

He has promised wholesale economic transformation for the battered economy, where inflation is at 143% and set to rise with the devaluation of the peso.

Miley also strongly criticized China and Brazil, Argentina’s two main trading partners, before the elections. China said on Tuesday it would be a “serious mistake” if Miley chose to cut ties between the two countries.

Reporting by Mark Jones, additional reporting by Elizabeth Howcroft, Bansari Mayur Kamdar and Karin Strohecker; Editing by Bernadette Baum and Emelia Sithole-Matarise

Our Standards: The Thomson Reuters Trust Principles.

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