November 4, 2008 / 10:10 PM / 12 years ago

Argentina markets rebound after October's sell-off

(Adds tax agency investigation)

BUENOS AIRES, Nov 4 (Reuters) - Argentina’s currency, stocks and debt markets rallied on Tuesday, recovering some of the ground lost last month when investor concern over the global crisis and a pensions takeover plan battered prices.

The benchmark MerVal .MERV stocks index closed up 6.19 percent at 1,123.11 points for a sixth straight gain in which it has risen 33.7 percent. Higher global oil prices bolstered energy-related stocks which led the session’s gainers, though banks were stronger earlier in the day.

“Stock prices are trying to find a new level after the bearish months,” said Mariano Tavelli, a trader at Tavelli & Co brokerage. “The MerVal again got a boost from the positive international context.”

Argentine banks are among the biggest holders of government bonds traded on the local market, which gained 4.7 percent on average on Tuesday for a fourth consecutive gain.

Leading the gainers was dollar-denominated Discount paper ARDISCP=RASL, which soared 10.7 percent, according to the ask price.

Local Argentine debt prices fell 60 percent on average because of the global financial crisis and a government plan to take over private pension funds.

Bargain-hunting has spurred the recovery and speculation about a possible government buyback plan has also lifted prices, which in turn have boosted bank stocks on the MerVal.


A surge in other global stock markets and rising crude oil prices lifted the MerVal higher in late afternoon trade, buoying index heavyweight and steelmaker Tenaris TENA.BA, which rose 11.49 percent to 44.15 pesos per share.

On the foreign exchange market, the peso closed sharply higher in light trade due to increased control by the Central Bank, including new restrictions on short-term financial operations, traders said.

Under rules announced on Monday, banks must hold onto bonds and stocks for at least three days. The measure aims to curb short-term buying and selling that causes abrupt movements in financial markets and to stem the dollar’s rise.

In recent weeks, the peso has dipped to levels not seen since a 2002 economic crisis amid stronger demand for safe-haven greenbacks. The Central Bank has sold millions of dollars in foreign reserves to prop up the local currency.

In an unusually sharp one-day rise, the peso closed up 2.65 percent to 3.29/3.30 per dollar in formal trade between banks ARS=RASL where the central bank routinely intervenes with sales or purchases of dollars.

In informal trade between foreign exchange houses, as measured by Reuters, the peso firmed 1.48 percent to 3.37/3.38 per dollar ARSB=.

Traders said Central Bank staff had been visiting foreign exchange houses in an apparent effort to discourage trade, while the chief of tax agency AFIP said authorities were probing suspected evasion in the foreign exchange market. (Reporting by Jorge Otaola, Walter Bianchi and Cesar Illiano; Writing by Helen Popper; Editing by Diane Craft)

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