Argentina Risk Spread Hits 524 Basis Points

Argentina’s risk spread on dollar-denominated bonds rose to 524 basis points. This marks a five-day consecutive increase. The metric reached its highest level since August 20. The weekly gain was 39 basis points.

The S&P Merval stock index lost 2.5 percent over the same period. The index closed at 3,021,925.96 points on September 18. This decline reflects heightened investor caution regarding Argentine assets. GN auto markets/indices: stock index data confirms the downward trend.

Fed Rate Hike Drives Capital Outflows

The US Federal Reserve raised interest rates by 25 basis points on September 16. This was the first increase since 2023. Higher US rates increase the appeal of Treasury securities. This shift reduces demand for emerging market debt.

Investors now demand a higher premium for holding Argentine bonds. The spread measures this additional yield compared to US Treasuries. The JP Morgan EMBI index tracks this divergence. One percentage point equals 100 basis points in this calculation.

Economic Data Shows Contradictory Signals

Argentina’s economy contracted by 0.6 percent in the second quarter. This is a decline compared to the first quarter. Year on year, the economy grew by 2 percent. The unemployment rate rose to 7.9 percent.

The Argentine peso remained stable despite the bond sell-off. The wholesale exchange rate stood at 1,514.50 pesos per dollar. A week earlier, the rate was 1,508.50 pesos. The central bank bought 36 million dollars in the market.

IMF Review And Debt Payments Loom

An International Monetary Fund mission arrives on September 21. They will conduct the third review of the country’s program. The assessment includes reserve accumulation and fiscal surplus targets.

Gross international reserves fell from 50.5 billion to 49.8 billion dollars. A debt payment of approximately 800 million dollars is due on September 25. This event may further impact market liquidity.