Argentina's Stocks Higher; Black Market Peso Volatile

  By Taos Turner 
 

BUENOS AIRES--All stocks in Argentina's Merval index rose on Wednesday, while the black market peso weakened sharply through most of the day on to strengthen abruptly at the end of trading.

The peso's late turnaround came after local media reported that Commerce Secretary Guillermo Moreno called key underground currency traders late in the day and told them to shut down their transactions or else he would put them out of business. That led some traders to immediately start charging less for greenbacks, according to a report by the daily Ambito Financiero.

For most of the day, the peso lost ground versus the dollar in the underground black market--eventually falling to ARS9.80, before climbing to around ARS9.40 versus ARS9.45 in the previous session, according to the newspaper El Cronista, which publishes rates collected from black-market traders.

Strict capital controls that limit the amount of foreign currency Argentines can purchase legally have fueled a parallel illegal market for dollars where people usually pay a steep premium for the U.S. currency.

The Argentine peso weakened to ARS5.652 against the U.S. dollar on the regulated MAE foreign-exchange wholesale market, versus ARS5.644 in the previous session.

The central bank intervenes in the exchange market daily to buy dollars and build its foreign currency reserves, while gradually weakening the peso to help exporters.

Meanwhile, the Merval stock index rose 2% to 3,925.31 in volume totaling ARS88 million ($15.5 million).

Stocks rose a day after government officials said they would slap a 15% tax on the purchase of certain securities that are not publicly traded. Some investors had been concerned the government would raise taxes on stock and bond transactions to help finance a reduction in income taxes.

The steel producer Tenaris SA was the most traded stock. It rose almost 2% to ARS195.

The financial conglomerate Grupo Financiero Galicia SA rose 2.8% to ARS5.85.

The state-owned oil company YPF SA rose about 1.5% to ARS148.25.

The DICP discount bond in pesos rose 0.38% in price terms to ARS0.38 while the 2038 PAVO bond, which was issued under New York law, fell 4.792% to ARS298.

The TVPE GDP warrant rose 1.18% to ARS85.50.