Argentina

Argentina bond investors couldn’t catch a break in 2018, with yields on the country’s debt soaring even after the government took out a record $56 billion credit line with the International Monetary Fund in an effort to bolster public finances, Bloomberg News reported. The average yield on sovereign notes from the country has almost doubled this year to 11 percent, and now tops the 10.9 percent rate on overseas securities from much smaller Ecuador, which has the dubious distinction of having the second-most defaults in the world since 1800.

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The International Monetary Fund’s executive board approved a $56.3 billion credit line for Argentina, clearing the way for the embattled South American economy to receive a larger amount of funding at a faster pace than originally negotiated, Bloomberg News reported. The board’s sign-off Friday ratified a revised agreement announced in September. Under the new deal, Argentina will receive about $35.8 billion throughout the remainder of this year and all of 2019, representing nearly a $19 billion increase from the original arrangement negotiated in June.

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The sell-off in the Argentine peso intensified on Friday, with the currency once again approaching record lows following another big drop at the market open, the Financial Times reported. The peso tumbled 4.7 per cent to hit 41.15 per dollar, knocking out its previous closing low of 39.79 and putting it just a hair away from the all time intraday low of 41.36 reached on August 30. The sharp drop follows Thursday’s 2.8 per cent decline and comes despite the IMF agreeing on Wednesday to increase its bailout package to the Latin American country by an extra $7.1bn.
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Argentina won a promise of extra cash and faster delivery from the International Monetary Fund, which expanded a record bailout to help the country defend its currency and pull the economy out of recession, Bloomberg News reported. Argentina’s credit line will increase to about $57 billion over three years, from the $50 billion announced in June. The Fund will also deliver more of that cash up front. Argentina has already received $15 billion and will have access to another $35 billion by the end of 2019.
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Argentine Central Bank President Luis Caputo resigned on Tuesday, a day after President Mauricio Macri said a revised aid deal with the International Monetary Fund would require a new approach to monetary policy, Bloomberg News reported. Just three months since moving to the central bank from the nation’s finance ministry, Caputo cited "personal issues" as the reason for his departure. He was immediately replaced by Economy Minister Nicolas Dujovne’s deputy, Guido Sandleris.
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Argentine President Mauricio Macri said a revised agreement with the International Monetary Fund will help shore up investor confidence in the nation after a currency rout pushed South America’s second-largest economy into recession, Bloomberg News reported. “We are working with the IMF and we are going to present something that will bring confidence,” Macri said in an interview with Bloomberg TV in New York.
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Argentina’s economy minister is to present austerity-driven budget measures to congress on Monday as the country tries to shore up support from the IMF and calm investors after a plunge in the value of the peso, the Financial Times reported. Allies of President Mauricio Macri said they were confident the plans would be backed, including by some moderates in the opposition. The president hopes to restore market confidence in his wounded administration after renewed currency volatility. The peso has fallen 20 per cent since late August.
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Fifty years of currency crises from Chile to Indonesia signal a bleak outlook for Argentina and President Mauricio Macri -- a deep recession followed by political upheaval. Countries that have seen their currency decline by more than 40 percent in a year have typically suffered economic contractions of more than 6 percent the year after. Argentina’s peso is down 53 percent in the past 12 months, Bloomberg News reported.
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Just days after panic swept through Argentine financial markets, some investors see pockets of opportunity but they also face the difficulty of trading in an environment distinguished by the evaporation of price liquidity, the Financial Times reported. Against this backdrop even small trades can move market prices sharply, making any substantial changes to a portfolio difficult to implement.
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Argentines are struggling in crisis in what was once one of the world's most prosperous nations. Consumer prices are soaring, unemployment is high and the Argentine peso has plunged, bringing back haunting memories of the country's economic meltdown in 2001 that pushed millions into poverty, the International New York Times reported on an Associated Press story. A growing number of people arrive at the "Happy Kids" soup kitchen in the Villa 1-11-14 shantytown, where servers try to stretch out steaming pots of stew because many more than expected are lining up for food.
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