Argentine peso slides on doubts over intervention, IMF talks

A man shows Argentine pesos outside a bank in Buenos Aires’ financial district. (Reuters pic)

SAO PAULO: Argentine equities and the peso both lost ground on Monday as analysts said intervention in the foreign exchange market by the nation’s central bank may prove less successful than originally hoped.

Traders are awaiting the outcome of talks between the Argentine government and the International Monetary Fund that began last week.

The multilateral lender is contemplating measures to strengthen its US$50 billion (RM200 billion) financing line with the nation after a recent rout in the peso, which has fallen some 50% against the dollar this year.

The central bank has auctioned off hundreds of millions of dollars of reserves in recent days in a bid to stem losses.

“With the IMF agreement, it’s not very clear how far the central bank is willing to intervene, and it seems that the (reserve) auctions are not bringing the results that the bank wants,” said Matias Roig, a senior financial adviser at Portfolio Personal.

The peso fell 0.94% by 1942 GMT, recovering slightly from earlier in the day, while the benchmark Merval equities index weakened 1.07%. The Argentine currency has risen or fallen at least 1% against the dollar every day for the last two weeks.

Across Latin America, equities markets were mixed after US President Donald Trump on Friday threatened to slap tariffs on some US$267 billion of Chinese goods.

In Brazil, where right-wing front-runner Jair Bolsonaro is recovering from a serious stabbing incident, the benchmark Bovespa fell 0.29%, dipping from a 1% spike earlier in the session.

Despite the overall decline, shares of state-run oil company Petroleo Brasileiro SA climbed more than 1% as oil prices rose.

The Brazilian real and Mexican peso were the only major Latin American currencies to rise on Monday, with the real firming 0.26% and peso strengthening 0.40%.

Mexico’s benchmark IPC index fell slightly as investors wait to see if Canada will join a revamped North American Free Trade Agreement (Nafta) with Mexico and the United States.

Canadian Foreign Minister Chrystia Freeland will meet US Trade Representative Robert Lighthizer in Washington on Tuesday to discuss the trade pact.