Financial day: the free dollar fell to a new low in 2022 and the stock market lost almost 5%, already discounted the agreement with the IMF

Argentine stocks saw significant profit taking on Monday, with the negative trend dragging on Wall Street, while sovereign bonds traded stable and alternative dollars deepened their decline.

The free dollar started the week with a drop of two pesos, to $202 for sale, a low since December 21. Over the course of 2022, the free dollar fell by eight pesos or 3.8 percent.

Other alternative quotes to the currency “stock”, such as the “liquidated spot” and the MEP dollar, were also surveyed since mid-November at $188.38 and $186.83, respectively. Financial dollars come from registering their biggest weekly decline of the year, following the average sanction in the Chamber of Deputies of the agreement with the International Monetary Fund (IMF).

Meanwhile, the wholesale dollar ended up being offered at $109.20, with an increase of 32 cents (+0.3%) to narrow the exchange rate gap to 83.2% with respect to the “blue” dollar, and to 74% compared to the “cash cash”.

The collapse of stock dollars was so marked that now the dollar to the public in banks, which averages $189.17 for sale, is more expensive than MEP and “liqui”, which savers can access without a monthly quota of $200.

The Central Bank bought some $91 million in a spot wheel with operations of USD 306.9 million, to add up to a net positive balance of about USD 556 million so far in March, after four months with a negative balance for its interventions.

As of this Monday, the agreement with the Fund was discussed in the Senate, with half sanction in Deputies, with the presentations of the head of Cabinet, Juan Manzur, the Minister of Economy, Martin Guzman, the head of the BCRA, Miguel Pesce, and other authorities, for the purpose to explain in the upper house the agreement concluded with the IMF.

The new agreement with the IMF, which seeks to be approved before a maturity of about USD 2.8 billion on March 22, establishes a grace period of four and a half years and extends disbursement payments to 10 years, so the government will begin to cancel the debt in 2026 and end in 2034.

The leading S&P Merval stock index of the Buenos Aires Stock Exchange lost a resounding 4.5%, to 84,955 points, after falling 1.4% on Friday. Shares in the energy and financial segments, the most liquid in the market, marked the trend of the square, led by Cresud (-9%), Pampa Energía (-7.4%), Transportadora Gas del Sur (-7%), Cablevisión (-6%) and YPF (-6%).

Abroad, dollar falls were led by Transportadora Gas del Sur (-6.9%), Cresud (-6.4%), Pampa Energía (-5.2%) and Telecom (-5.1%).

Global dollar bonds closed with an average low of 0.6%, while JP Morgan's country risk remained nine units for Argentina, at 1,807 basis points at 5pm, mainly because US Treasury bonds fell in prices and yields steeped at 2.14% per year for the title ten years, the highest rate since June 11, 2019.

Likewise, the agreement on dance must have the approval of the Board of Directors of the organization, which is expected to occur immediately after the sanction into law by the Argentine Congress.

“Political and economic constraints predict a continuous struggle in the mud of decline if strategic changes are not addressed,” said Roberto Drimer, head of consultancy firm VATnet Research.

Economist Miguel Broda argued that “the economy will enter a path of extreme financial fragility” at the current juncture.

On top of injury, the market added another stumbling block as the Government closed on Sunday the record of exports of soybean meal and oil, which speculates that it is the initial step towards raising tariffs on exports of these products, a measure widely rejected by agricultural entities.

In the external context, markets went from highest to lowest, following signs of progress in the peace talks between Russia and Ukraine. European indices ended with gains, but Wall Street closed in the red. The Nasdaq technology index resigned 2%; the S&P 50, 0.7%, while the Dow Jones of Industrialists ended up neutral.

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