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Argentina Markets Fall On Economic Fears Amid Second Wave Of COVID-19

BUENOS AIRES, Apr 13 (Reuters) – Argentina’s financial market returned to negative territory on Tuesday, amid a growing second wave of COVID-19 and mobility restrictions that put the country’s ailing economy in check.

The Minister of Economy, Martín Guzmán, is in Europe – this Tuesday in Berlin and Wednesday in Rome – to seek support in the negotiations with the IMF and to see the possibility of rescheduling an upcoming maturity before the Paris Club.

“The weakness of domestic assets extends from the concerns that the sanitary restrictions arouse by the second wave -and its economic effects- before which the ‘ADRs’ remain weak and the bonds immediately evaporate the rebound that allowed them to briefly rehearse the ‘Ecuador effect’ after the election results, “said an economist.

* OTC sovereign bonds fell 0.4%, after rising an average 1.3% on Monday with the regional boost given after the triumph of banker Guillermo Lasso in the presidency of Ecuador, prone to being closer to financial markets .

* The country risk of Argentina prepared by the JP.Morgan bank rose four units, to 1,590 basis points towards the close of the local market (2000 GMT).

* “The lack of ‘drivers’ to stimulate demand and the consequent decline in transaction volume continue to mark the fate of local assets that are unable to reverse the downward trend,” said Fernando Staropoli, of Rava Bursatil.

* The S&P Merval stock index lost 0.89%, to a provisional close of 47,679.06 points, in a place with reduced entries due to the low investment appetite for local assets, traders said.

* The wholesale peso was devalued by 0.05%, to 92.62 / 92.63 per dollar, with early regulation of the central bank (BCRA), which at the end of the last few days took advantage of to add dollars to its coffers, although not it is reflected in the level of reserves due to the intervention in the bond market to prevent the exchange rate gaps from widening, traders said.

* The entity bought this Tuesday from the market about 140 million dollars, which is added to the 130 million of Monday, plus another almost 520 million of the previous week.

* “Faced with the second wave of COVID, the national government is still debating what type of quarantine to apply and therefore what types of assistance measures it should impose,” said consulting firm Delphos Investment, after payments were stipulated in 2020 additional for the most affected workers and for those who belong to the informal economy.

* He argued that this was addressed “with monetary issuance, with a direct impact on the price of alternative dollars. Issuing new currency without support went first to the dollar and then to prices (…)”.

* In the alternative segments, the peso was traded at 150.8 per dollar on the “Cash with Liquidation” stock market (‘CCL’), at 142.5 on the so-called ‘MEP dollar’ of the Electronic Open Market (MAE) and at 142 units in the small informal exchange plaza.

* The Consumer Price Index (CPI) of Argentina would have registered an advance of 4% in March, driven mainly by the items ‘Food’ and ‘Education’, according to the average of a Reuters poll.

(Reporting by Walter Bianchi; Additional reporting by Hernán Nessi; Edited by Jorge Otaola)

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