Argentina seeks market makers to help stabilize the peso: sources
Reuters
Published Mar 15, 2019 02:09PM ET
Argentina seeks market makers to help stabilize the peso: sources
By Eliana Raszewski
BUENOS AIRES (Reuters) - Argentina's central bank wants to license market makers to help stabilize its embattled peso currency when the Treasury starts newly announced dollar sales in April, two people with direct knowledge of the plans told Reuters on Friday.
The bank hopes the market makers, dealers who agree to buy and sell at set prices, would bolster liquidity in the exchange market to help avoid the sharp gyrations the peso has suffered in recent weeks when it hit a record low of 42.5 pesos per dollar in thin trading.
"We are going to take advantage of the existence of this market auction to promote the creation of market makers in the FX market, something that does not exist now," said one of the people. "It is something that we are talking with banks and it will most likely start together with the Treasury bids."
Both sources asked not to be named because the plan has not been made public. Argentina's central bank declined to comment.
Argentina's treasury minister Nicolás Dujovne revealed on Thursday that the treasury would sell $9.6 billion in dollars from April until the end of the year via daily auctions of $60 million, aiming to acquire pesos to pay for ongoing expenses.
The announcement came after a sharp fall in the peso, dragged down by emerging doubts about the progress of the economy and rising political uncertainty generated by the upcoming general elections in October.
The second person said the dollar auctions "would provide liquidity at a time when it is possible that, given the uncertainty of the electoral process, the market will have this kind of dynamic," referring to market volatility.
Argentina's peso has remained recently within a non-intervention trading band that came into effect last year, but the central bank is concerned about volatility in a market where there can be low liquidity.
"One thing is the value (of the peso), and another thing is when the variations are very abrupt and with little liquidity," the second person said. "That type of dynamic is disruptive."
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.