In Argentina, Financial Risks Deepen Along With Investor Jitters.

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Argentina’s debt sank deeper into distressed territory, in just the latest week of sour financial news. This highligted growing doubts about the near-term prospects for Latin America’s third biggest economy.

The peso currency hit fresh record lows this week on a daily basis, trading in the parallel black market at nearly 350 per U.S. dollar; down nearly 4% from the previous day, according to private traders. So-called over-the-counter sovereign debt slipped 1.1% overall, fueled by persistent investor doubts. Even as yields for the benchmark Bonar 2030 bond exceeded 40% after its value tumbled 2.1%.

On the political front, bad luck compounded the situation as the White House canceled a scheduled meeting between U.S. President Joe Biden and his Argentine counterpart Alberto Fernandez, due to the former leader’s recent COVID-19 diagnosis. Newly-installed Finance Minister Silvina Batakis has so far failed to calm anxious markets. Despite her commitment to follow through with the country’s current debt deal with the International Monetary Fund (IMF).

In a bid to boost dwindling U.S. dollar reserves, the government announced on Thursday a plan to allow foreign tourists to exchange greenbacks at a significantly higher rate than previously available. read more

Due to a widening exchange rate gap with the official, tightly-controlled rate, much of the hard currency brought in by tourists never enters central bank coffers. Currently, U.S. dollars are worth more than twice their value in pesos in the black market versus the official rate.


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