As of June 15, the Buenos Aires Stock Exchange Merval Index had retreated 6.9% from its all-time highs reached on June 2. The sudden drop stopped near a significant retracement level from the uptrend that began in mid-November 2016.
If we adjust this chart according to the ARS/USD exchange rate, the weakness becomes more apparent, since the stock index has not been able to hold the USD 1,400 level, which it first broke around mid-May.
The weekly average of daily volume came near ARS 600,000 when the market reached its latest highs, deftly surpassing trading activity seen so far during 2017. Recent selling pressure has not been accompanied by similar volume.
We must also highlight the issuance of a new peso-denominated bond that pays a coupon rate based on the current monetary policy rate (namely, the center of the 7 days repo corridor). Total offers for the bond (which matures in June 2020) equaled ARS 65,264 M, but the Ministry of Finance accepted only ARS 57,255 M at a price of ARS 1,010 per ARS 1,000 of nominal value, which results in a yield spread of – 48 basis points. Additionally, ARS 17,745 M were sold to the Bank of the Argentina Nation, resulting in a total financing of ARS 75,000 through this instrument.