In the four-week period between August 7 and September 4, the Merval
Stock index gained 11%, breaking the resistance level located at 22,600
points. The rally was consolidated by a significant uptick in volume,
particularly on August 14, when around ARS 1,030 million were traded,
barely below the record high for the year that took place on June 21.
The fact that this rally took place in spite of a stronger peso
amplifies profits in dollar terms. In the same four-week period (August
7 to September 9), the official peso – US Dollar exchange rate fell
2.6%. Even if the Merval stock index has dipped throughout the first
weeks of September, a further drop in the value of the US dollar
against the peso has ensured that the leading stock market index
remains near record highs in dollar terms.
Even if dollar-denominated sovereign debt bonds have taken a hit from
the recent surge in the value of the argentine peso, its performance in
dollar terms has followed the uptrend in stock markets. Bonar 2024
bonds have once again started to yield below 5%, whereas Discount
bonds’ yield have reached a new 52-week low. The following chart shows
the evolution of yields on these two popular bonds since early 2016.
Looking ahead to the following week, all eyes are set on the next Central
Bank of Argentina bills auction that will take place on September 19.
According to data from the Central Bank, a total ARS 484,211 million (which
represent 46.5% of all outstanding bills) are due to mature on September
20. Recently, by maintaining its objective rate stable, the monetary
authority has shown that it is willing to hold a contractive policy. Core
inflation has remained close to 1.5%, strictly above target range, which
has in turn forced the Central Bank to hold high interest rates. However,
the recent surge in the peso could help the entity to release some
liquidity without having to worry about the exchange rate reaching