Exchange rate tension: country risk reached its highest point in eleven months

Country risk climbed to 1,140 basis points during this session, reaching its highest level in the last eleven months , according to NA . Meanwhile, sovereign bonds are further declining, falling around 3% amid currency tensions.

The JP Morgan index reached a new high in almost a year at the close of last week and promises to continue its climb due to the negative performance of dollar-denominated securities, due to the uncertain outlook regarding debt repayment capacity given the possible use of reserves in the foreign exchange market.

With the upward trend, Argentina's country risk climbed to almost double the figure it started the year with (600 points). It is only below Bolivia (1,385 points), in second place on the podium, completed by Ecuador (689 points).

Rava Bursatil analyzes that the government "faces a dilemma regarding exchange rate policy, with the defense of the ceiling on the wholesale dollar band and support from the IMF , while the possibility of a change in the scheme after the October elections is looming," stating that "this situation generates concern about the impact on reserves and country risk."

At the start of the week, bonds continued to decline, with the Global 2046 leading the losses (-3.6%), followed by the Bonar 2041 (-3.6%), and the Bonar 2038 (-3.1%).

In this context, the stockbroker explained that "the deterioration of the Treasury's deposit position and the alleged sell orders from the Central Bank in the foreign exchange market caused a sharp drop in sovereign bonds, driven by concerns about the potential use of reserves."

Along the same lines, he stated that "Argentina's challenging scenario is being analyzed, with no capacity to refinance debt in international markets, given the high country risk and significant maturities."

In contrast, the shares of Argentine companies listed on Wall Street are trading mostly higher, with Transportadora de Gas del Sur (4.1%); IRSA (3.1%), and Cresud (2.4%) gaining the most.

Locally, the S&P Merval index is trading slightly higher, rising 0.4% to 1,767,299.71 points. Among the biggest gainers were Cresud (2.95%), Irsa (2.73%), and Transportadora Gas del Sur (2.30%).