ZCZC
BCN-06
ARGENTINA-STOCKS-MARKET-LEAD
Argentina stock market plunges 8.33 percent
BUENOS AIRES, June 19, 2018 (BSS/AFP) – The Buenos Aires stock exchange
plummeted more than 8.0 percent Monday, pulled down by sharp declines in
energy and bank shares amid market volatility as Argentina seeks support from
the IMF.
The Merval Index dropped 8.33 percent to 27,636 points, after President
Mauricio Macri fired Energy Minister Juan Jose Aranguren and Production
Minister Francisco Cabrera in a surprise move over the weekend.
Argentina is expecting to receive Wednesday the first $15 billion tranche
of the $50 billion standby loan announced by the International Monetary Fund
in return for a commitment to reforms of an economy weakened by a chronic
budget deficit and more than 20 percent annual inflation.
The Argentine peso, however, continued its slow recovery, gaining 0.66
percent Monday on Friday’s close.
The stock market drop comes on the eve of a “Super Tuesday,” the date when
Central Bank’s debt — equivalent to nearly one third of its reserves — is
renewed.
If investors do not renew the debt, there is likely to be an increased
demand for the US greenbacks, making the peso less valuable.
The IMF announced the loan in early June after Latin America’s third
largest economy sought help to bolster market confidence following a currency
crisis in April and May. Last week, Macri replaced Central Bank head Federico
Sturzenegger with the finance minister, Luis Caputo, a former Deutsche Bank
executive.
Caputo’s main task is to prevent a run on the peso, which has lost nearly
35 percent of its value since January.
On Saturday, Macri fired two more powerful cabinet members, Aranguren —
the former president of Anglo-Dutch oil company Shell in Argentina — and
Cabrera.
Macri was forced to defend Aranguren in March after the minister admitted
keeping his $88 million fortune abroad because he lacked faith in the
domestic economy.
Dante Sica, an economist, takes over from Cabrera, while Javier Iguacel, an
engineer, assumes the post Aranguren held since 2015.
Macri’s decision earlier this year to seek an IMF loan is an unpopular move
in a country in which many associate the Washington-based Fund with painful
memories of past economic and social crises.
BSS/AFP/MR/ 1038 hrs