BUENOS AIRES (Dow Jones)–Argentina’s stocks and bonds tracked Wall Street rising higher on Wednesday, as investors bet that European policy makers are close to a lasting solution to the regions sovereign debt crisis.
The Merval index of leading shares rose 1.1% to close at 2880.78 on volume of 52.9 million pesos ($12.5 million).
U.S. and European markets rallied on news that European Union finance ministers will finalize details of a bank-recapitalization plan outlined by EU leaders on Wednesday.
«The tip of the week is wait for news out of Europe,» a Buenos Aires-based trader said.
Banking concern Grupo Financiero Galicia SA (GGAL, GGAL.BA) fell 0.2% to ARS4.57, utility holding company Pampa Energia SA (PAMP.BA, PAM) rose 1.6% to ARS2.53; aluminium smelter Aluar Aluminio Argentino SA (ALUA.BA) rose 2.9% to ARS3.88; and phone company Telecom Argentina SA (TECO2.BA, TEO) rose 3.1% to ARS20.05.
Turnover on the local bond market was ARS923.3 million, accounting for about 75% of the total volume of securities traded on the exchange during the session.
The peso-denominated 2033 discount bond rose 1.1% in price terms to ARS136.50, bringing the yield to 11.79%. The Bogar 2018 rose 0.6% to ARS210.52, to yield 12.65%, while the Bonar X closed 1% higher at ARS388.95, yielding 9.21%. The Boden 2015 rose 1.3% to ARS427.50, yielding 7.03%. The 2035 peso-denominated gross domestic product warrant dipped 0.2% to ARS15.85, while dollar GDP warrants closed 1.3% higher at ARS76.00.
The peso closed unchanged from the previous session at ARS4.2355 to the U.S. dollar on Argentina’s MAE foreign-exchange wholesale market Wednesday, bringing its year-to-date loss to 6.1%.
Under the Central Bank of Argentina’s managed exchange rate policy, the peso is allowed to gradually weaken to help exporters and check inflation.
Puente brokerage said in its afternoon foreign-exchange comment that the central bank was a net seller of dollars during the session to the tune of $180 million, bringing its total sales so far this week to $430 million.
«The monetary authority made itself felt in the spot market, selling close to $200 million and only near the end of the session could it repurchase some of what it had sold,» Puente strategists wrote.
The central bank and social security agency Anses have stepped up their intervention in the foreign-exchange markets in recent months to keep the peso steady in the face of heavy capital outflows.
Investors fear that President Cristina Kirchner will be forced to allow the peso to weaken at a swifter pace as double-digit inflation causes the local currency to appreciate in real terms with negative implications for exporters in the manufacturing sector. The central bank’s managed float of the peso has dented its international reserves, which fell to $47.7 billion on Wednesday from $50 billion at the end of August. The administration’s response has been to deter the public from buying dollars, while at the same time forcing resource companies to repatriate all of their export revenues.
A presidential decree published Wednesday in the Official Bulletin abolished regulations that allowed oil and gas companies to freely dispose of up to 70% of their export revenues. Mining companies, which up until now were largely free of foreign-exchange restrictions, will also have to repatriate all of their export proceeds.
«In our view the authorities should make several adjustments to their macroeconomic policy mix to cool down expectations of much faster depreciation being priced by the market,» Nomura Securities strategist Boris Segura.
At the beginning of the week, the central bank, anti-money laundering agency UIF, and tax agency AFIP launched a broad crackdown on foreign-exchange houses and individuals seeking to buy dollars in the nation’s capital in a bid to reduce the pressure on reserves.
-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740, ken.parks@dowjones.com
Source: /online.wsj.com