Argentina Black Market Peso, Stocks Bounce As Economy Chief Pledges Continuity

Argentina's closely watched black market peso rose more than 1% to 257 per dollar on Tuesday, traders said, recovering ground after crashing a day earlier as the country's new economy minister pledged fiscal responsibility and stability.

Argentina's new economy minister Silvina Batakis was sworn in late on Monday and quickly moved to calm markets worried that the abrupt exit of her predecessor, Martin Guzman, would spark a shift towards populist policies and state spending.

The black market exchange rate is seen as a reflection of real investor sentiment in the currency with the official rate held stable by strict capital controls that push people into parallel markets to obtains dollars.

The S&P Merval stock index rose a bit over 2% in trading on Tuesday after falling on Monday. Over-the-counter sovereign bonds, already in distressed territory of around 20-25 cents on the dollar, slipped on average 3%.

Traders said the central bank had intervened heavily to support the peso currency and bonds. The official exchange rate, kept on a tight leash since 2019, edged down 0.18% to 126 per dollar.

"The market is red hot, with a central bank selling dollars and intervening in bonds, in pesos to try to maintain their prices," said economist Rodrigo Alvarez.

(Graphics: Argentina: currency split:

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