Argentina’s government asked creditors to accept big losses in the value of the bonds they hold. It proposed that those who hold $65billion-worth of paper, nearly 40% of foreign-currency debt, accept sharply lower interest payments and wait three years to receive them. The plan was rejected. Argentina may be headed for its ninth default. The consequences of default would be grisly.
Low river levels in the main export complex of Argentina has lead to much lower corn prices on a FOB basis, as buyers can only lift part cargoes leaving a surplus of the grain that must be exported at docks. Prices for a 25-40,000 mt handysize cargo of corn loading in the next two months were assessed at $146.25/mt FOB on Thursday, down $28/mt since the start of the month.
According to a recent report by the economic consulting firm Ecolatina, inflation projections are slightly below 53.8% in 2019, bordering 50% in 2020. In a scenario of controlled, regulated prices, limited wage pressures and an official exchange market that may tighten but would not be overwhelmed; thanks to a stock of net reserves of more than $10 billion, a high external surplus and the exchange rate trap, the risks of a hyperinflationary shock are low.
65% of the metallurgical companies are not operating or working with difficulties, and one out of three do not have resources to pay April’s salaries, according to a sectorial survey carried out by the Association of Metallurgical Industries of the Argentine Republic – ADIMRA – in which the impact of the coronavirus on the activity is analysed.
Since Friday 17, the dollar price of the “blue” dollar has risen 13.4%, to 117 pesos, after reaching a historic intra-day high of 120 pesos on Thursday. The cost of the ” liquid cash” dollar rose 8.8% in the week, to 111.70 pesos. The exchange rate gap between the official dollar and the alternative parities is close to 70% and is the highest since September 2014.