Spot gold climbed 1.8% to $1,934.62, a new record after an escalation in the geopolitical dispute between the United States and China, which affected the dollar and threatened to hit the global economy even harder. Gold has climbed 28% this year. The dollar is losing its appeal as a refuge. The dollar depreciated on Monday to a nearly two-year low against the EUR, which rose 0.9% to $1.18. In a similar vein, the Yen gained 0.8%.
The economic depression generated by the extensive quarantine triggered originally expected expenditures by 18%, and reduced the resource forecast by 20%, according to the bill sent by the government to Congress. A total projected deficit of 10% of GDP emerges. It would mean the most profound imbalance in 45 years.
The massive consumption had during the month of June, a fall of 3.2% compared to the same month of the previous year. According to the product categories, the main consumption drops in June were in non-alcoholic beverages (-13.4%); sweets, (-9.6%); hygiene and cosmetics (-5%); spirits (-3.8%) and perishable and frozen (3.6%).
Adecoagro, Argentina’s largest milk producer, received a $100 million credit from the International Finance Corporation (IFC) a few weeks ago, which will use to make investments in the agro-food sector to double its milk production to 200 million litres a year. The firm, which listed on Wall Street, also has assets in Brazil and Uruguay.
According to a recent report by the National Securities Commission (CNV), financing for SMEs in the first half of the year increased 80% year-on-year. The deferred payment cheque remained the main instrument, reaching more than 90% of the amount obtained by the companies. 48% of the companies financed between April and June in the capital market were SMEs.
For the first time in the year, private dollar deposits registered a monthly growth during July. As of July 20, official data show that the stock of these private placements has grown by $270 million, reaching a total of $17.06 billion, after falling to levels of $16.77 billion.
The Central Bank’s board of directors was able to renew the currency swap with the Central Bank of China for about 130 billion yuan, equivalent to $18.2 billion, which was due to expire on July 27. This amount represents 42% of the BCRA’s gross reserves, which stand at $43.35 billion. The Central Bank’s board of directors is thus seeking to strengthen the reserves.
The coronavirus aggravated the crisis unleashed in April 2018, particularly affecting the lower-income segments. About three million workers, informal and independent, had severe difficulties in carrying out their activities during the isolation. Construction, hotels, restaurants, entertainment services and domestic service were the most affected. This deterioration is being mitigated by the Emergency Family Income (IFE), covering on average about 40% of the labour income of this segment.
Argentine shares have climbed to over 15% in the last five days, an escalation that market specialists see as a preview of a possible agreement on sovereign debt restructuring. Among the week’s most notable increases were those of Loma Negra (+15.5%), Transportadora de Gas del Sur (+12%) and Grupo Financiero Galicia (+12%).
Since Argentina launched the last official offer until today, dollar bonds performed positively, rising more than 10% weighted. In stocks, we see a more than exciting rise: Merval grew 22% in pesos and 17% in dollars. Among the Argentine shares quoted on Wall Street, instruments grew up to 35.5% in the month (Banco Supervielle). Irsa, meanwhile, grew 32.6% in July.