Argentina seeks market makers to help stabilize the peso - sources
By Eliana Raszewski
BUENOS AIRES, March 15 (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."
(Reporting by Eliana Raszewski;
Editing by Adam Jourdan and Phil Berlowitz)
First Published: 2019-03-15 19:34:22
Updated 2019-03-15 19:48:32
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