The main Argentinian index, Merval, surges 11% after key rate cuts

The Argentine stock market gains 4.63% and reaches 1,074,448.77 units on Wednesday after interest rates collapsed.

Gabriel Micillo•Wednesday, March 13, 2024•1 min read

The S&P Merval continues its upward trend and rises another 4.6% following yesterday’s 7% increase after the Central Bank (BCRA) abruptly reduced the benchmark interest rate.

The S&P Merval continues to rise, gaining another 4.6% following yesterday’s 7% increase due to the arrival of fresh liquidity after the Central Bank (BCRA) abruptly reduced the benchmark interest rate. In this context, local stocks climbed up to 11%.

The Argentine stock market gains 4.63% and reaches 1,074,448.77 units on Wednesday, March 13th.

The BYMA stock index gained 7.2% yesterday, following a 4.5% decline registered last Monday with the announcement of a debt swap. This marks its largest daily increase in almost 4 months, since November 21, 2023.

Meanwhile, Argentine stocks trading on Wall Street closed mostly higher. The biggest gainers were Grupo Financiero Galicia (+4.6%), BBVA (+4.4%), and Transportadora de Gas del Sur (+3.6%).

Among the biggest decliners were Despegar (-2.2%), Bioceres (-1.3%), and Mercado Libre (-0.1%).

The BCRA lowered its policy rate to 80% annually from the previous level of 100% and eliminated minimum rates on term deposits amid an ambitious Treasury debt swap. In the local market, stocks surged by as much as 11.5%, as seen in the case of Edenor. Following closely were Transener (+10.4%), Grupo Financiero Galicia (+9.8%), and Transportadora de Gas del Sur (+8.7%).

Bank yields for savers plummeted to an average of 75% from a floor of 110% in effect, in line with the BCRA’s decision, according to a survey of Reuters operators.

These decisions will increase liquidity in pesos in the market. We expect this liquidity to be channeled towards the acquisition of dollar-denominated instruments, the weakening of the parallel exchange rate, or instruments linked to inflation.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Gabriel Micillo

Gabriel is a certified public accountant graduated from UNNE (National University of the Northeast, Argentina) and a software developer, currently pursuing a Master's degree in Finance and Economics. With nearly 8 years of experience working for accounting firms and brokerage firms. Concurrently, he has produced economic and financial reports on the current state of regional economies for the clients of the establishments where he has worked. Additionally, he assisted colleagues like Ignacio Teson in the drafting and editing of articles on similar topics in English language.