DOLLAR-DENOMINATED DEBT HAD A NEGATIVE SESSION AMID UNCERTAINTY FOLLOWING THE ESCALATION OF THE CONFLICT IN THE MIDDLE EAST, FALLING 0.5%, IN LINE WITH THE PERFORMANCE OF EMERGING MARKET DEBT. The long end under foreign law was the most affected, declining by up to 1.2%, while the short end under local law edged down just 0.1%. With this performance, country risk is approaching 600 bps and closed at 588 bps. Meanwhile, Bopreal bonds also fell 0.5%.

‍ARS-DENOMINATED DEBT ALSO REACTED NEGATIVELY, WITH THE EXCEPTION OF DOLLAR-LINKED BONDS, WHICH ROSE 0.8%, consistent with the increase in exchange rates. In dollar terms, however, dollar-linked bonds declined 0.6%. Both CER bonds and the fixed-rate curve fell 1.6%, while dual bonds were down 1.4%. As for rates, the overnight repo and the one-day call rate remained around 20% nominal annual rate (NAR).

‍THE OFFICIAL EXCHANGE RATE RESUMED LAST WEEK’S UPWARD TREND, RISING 0.7% TO CLOSE AT $1,411.1, STANDING 14.3% BELOW THE UPPER LIMIT OF THE FX BAND. Financial dollars also moved higher: the MEP gained 1.3% and the CCL rose 1.4%, closing at $1,438.8 and $1,481.2, respectively, while the spread between them held at 2.9%. The increase in exchange rates took place amid a stronger US dollar globally, while the BCRA continued purchasing foreign currency in the official FX market (MLC), albeit at a slower pace, with net purchases of USD 17 million. As a result, net purchases for the year now total USD 2.800 billion. In this context, gross international reserves fell by USD 382 M to USD 46.135 M.

‍THE MERVAL FELL 0.2% IN PESOS, WHILE IN DOLLAR TERMS IT DECLINED ANOTHER 1.6%, CLOSING AT USD 1,753. The most affected sectors were communication, industrials, and materials, with shares of Aluar, ByMA, and IRSA leading losses, falling between 5.8% and 7.2% in dollars. Meanwhile, bank stocks partially offset the decline, with Supervielle, TGN, and Galicia posting gains of between 0.7% and 1.6%.