Gov't curbs dollar low, though not bonds'

BRCA reserves

Dollar kept on sliding and forced Argentine Central Bank (BCRA, in its Spanish acronym) to buy more than $50 millions to prevent a sharp fall.

Meanwhile, debt bonds continue adrift because foreign investors do no want Argentine risk, while local ones are waiting for better times to sell them.

The last trading hour saved Argentine bonds from a serious collapse yesterday. Debt swap instruments had a really bad time. Peso-denominated Discount ended with a 0.37-per cent decrease after hitting more than 1 per cent down and Par in the same currency lost 1.20 per cent.

The last hour also saved dollar-issued bonds. Till that moment, country-risk had grown almost 17 points. But final rise managed to revert the trend and risk plummeted 2.8 per cent to 413 points. On Monday, it had climbed 5 per cent. Post-default bonds in pesos closed well-balanced thanks to final purchases and prevented negative figures.

No trading was observed in GDP coupons. Thus, they remained unchanged.

Low amounts

Bond market situation in Argentina is really worrying. Trading is too low due to investors' lack of interest in placing their money in these assets, so severely lashed by measurements of Argentine Statistics and Census Institute (INDEC, in its Spanish acronym). We should not forget that Argentine instruments adjust by cost of living. Between the Electronic Over-the-Counter Market (MAE, in its Spanish acronym) and Buenos Aires Stock Exchange, ARG$1.5 billion was traded, a poor volume.

This investors' apathy becomes clearer if we consider the fact that domestic bonds yield more than 20 per cent, against US Treasury bonds' 4.10 per cent. But nobody wants Argentine risk in portfolio, despite having a five-fold higher rate. Bond prices mirror investors' distrust. They did not like increases in fuel and crop export tariffs, because these measures show lack of legal security and a State willing to impose each company how much they should earn. Neither do investors enjoy listening to future administration's speech about INDEC. They are afraid of the phrase "social pact", because Argentina has always had hidden price controls. Investors are worried that Argentina's growth may get worse due to energy shortage and that, instead of encouraging oil companies, more withholdings may be applied as punishment, discouraging drilling of new wells.

On top of all that, dollar continued down and BCRA was forced to buy more than $50 millions to prevent it from further sliding. With those purchases plus euro rise, reserves settled again above $44 billions.

In Forex-MAE, the American currency ended at ARG$3.1330 and, in exchange agencies, it continued at ARG$3.15.

Dollar shows a buying trend for today Wednesday. As a consequence, a slight rally may be observed without BCRA intervention. Offer holds only $5 millions against $60 millions in bid.

Today will be the last full trading day, because markets then will reach a deadlock in view of tomorrow's public holiday in US and Friday's half-holiday.