The Argentine political crisis is deepening after the failure of the Omnibus Law in Congress and the tension between the National Government and the governors. This has resulted in Argentine assets spreading their red, with stocks and bonds remaining in negative territory. The Merval index fell 3.5% and the country risk rose again, adding to the uncertainty surrounding the direction of the economy.
In the exchange market, parallel dollars were less in demand, especially after various public statements made by Minister of Economy Luis Caputo about the near future of the economy. Blue lost $25 and returned to $1,145 on the street, while stock prices also moved in a downward trend.
The MEp dollar fell 1.3% and ended at $1,183; while cash with liquid fell 1.4% and settled at $1,246. The market closely follows the Central Bank’s ability to buy dollars to rebuild its reserves and signs of updating its daily devaluation rate. However, these purchases do not directly translate into central coffers as BCR reserves have lost US$1.2 billion since last Thursday.
The lack of political clarity regarding the direction of the economy is hitting harder on share prices, which had initially been presented as an anti-inflationary refuge in January’s first month. The Merval index ended red for four consecutive rounds, with all listed companies closing with negative results. Sovereign bonds also closed lower along their entire curve as political instability continues to impact Argentina’s economy and reserves are eroding rapidly.
Overall, this has led to a decline in shares and bonds exacerbating ongoing economic challenges faced by Argentina as it struggles to find a clear direction for its future economy amidst political turmoil.