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Argentina’s foreign exchange market pressured by hedging as the second wave of COVID-19 advances

BUENOS AIRES, Apr 27 (Reuters) – The Argentine peso ended Tuesday lower in its various variants due to new currency hedges given fears that greater restrictions on mobility due to the strong advance of COVID-19 will impact on the weakened economy.

To the health issue, there are doubts about the slow negotiations for debt impossible to comply with with the International Monetary Fund (IMF) and the Paris Club, in a year in which mid-term elections are being held.

“The clouds are hanging over the prospects for Argentina,” Capital Economics said, noting that “it seems likely that strict restrictions will be maintained in the coming months to ease tensions in the health system and that will keep production weak during the second quarter.” .

* The wholesale peso closed with a controlled fall of 0.06%, to 93.33 / 93.34 per dollar, with the central bank (BCRA) regulating market liquidity, a situation that allowed it to buy about 70 million for its reserves of dollars in the day, commented operators.

* “So far this year, the BCRA bought 3,375 million dollars thanks to the boom in commodity prices, while reserves grew only 799 million dollars (24% of the total),” he said the consulting firm Libertad y Progreso.

* He explained that “although a part was used to pay off the debt of international organizations (830 million dollars), a large amount of those dollars went to support the parallel dollars.”

* Operators agree that the evolution of the peso will depend on the economic and monetary policies adopted by the BCRA, since if stricter restrictions are announced due to the coronavirus, the collection will fall and the entity will have to issue more circulating, which due to antecedents puts pressure on the exchange rate.

* The currency in the small informal segment fell 1.86%, to 161 units, a level similar to that recorded in mid-January, accumulating a 17-cent collapse in the last four business sessions.

* On the other hand, in the stock market ‘Cash with Settlement’ ‘CCL’, the peso fell to 155 units and in the so-called ‘MEP dollar’ it fell to 151.50 units per dollar.

* Gustavo Ber, economist at Estudio Ber, pointed out that “the dollars (alternative) ‘MEP’ and ‘CCL’ continue to be more in demand, and thus it is that they prolong the recent upward readjustment (depreciation of the peso) in the face of a growing search for coverage in the current climate of uncertainty, still prematurely in view of the seasonality of liquidations and the elections. “

* On the other hand, bonds in the OTC market ended with an average improvement of 0.7% compared to opportunity purchases due to their attractive returns, with the title ‘Bonar 30’ that rose 0.8%. The country risk fell 16 units, to 1,543 basis points towards the close of the local market (2000 GMT).

* In the stock market segment, the leading S&P Merval index rose 2.15%, to a provisional close of 48,962.16 points, after accumulating an improvement of 1.72% in the previous two business sessions. This leading benchmark drags a loss of 4.42% so far this year.

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

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