UPDATE 1-Argentina's parallel peso strengthens on new economic measures, stock index plummets

The Argentine parallel market peso appreciated against the U.S. dollar on Monday while the local stock market suffered, after new economic measures introduced by President Javier Milei's government over the weekend came into effect. Argentina's economy minister outlined on Saturday a plan to stop expanding the monetary base in an effort to combat inflation and the following day announced a $1.5 billion purchase from the central bank to pay bond interest due in January.

The Argentine parallel market peso appreciated against the U.S. dollar on Monday while the local stock market suffered, after new economic measures introduced by President Javier Milei's government over the weekend came into effect.

Argentina's economy minister outlined on Saturday a plan to stop expanding the monetary base in an effort to combat inflation and the following day announced a $1.5 billion purchase from the central bank to pay bond interest due in January. The peso extended its gains to 5.63% at 1,420 pesos per dollar, after strengthening around 2% in early morning trading.

The gap between the black market "blue" exchange rate and the official rate narrowed slightly, and stood at 54%. "The announced measures can be taken as a positive, only if the gap falls significantly in the coming days and inflation plummets in the coming months," said local settlement and clearing agent Neix.

The benchmark Merval plummeted 8%, registering the largest intra-day decline among the main stock indexes in Latin America.