Argentine Central Bank Intervenes As JPM Warns Of "Disorderly" Peso Collapse | Zero Hedge
Description: The peso is in freefall... down over 5%, breaking 24 per dollar...and then BCRA intervened (again)

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## Don’t Be Fooled By The Dollar's Recent Rise – It’s Still Going Down Much More

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# Argentine Central Bank Intervenes As JPM Warns Of "Disorderly" Peso Collapse

Update 2: Freefall...

- *ARGENTINE CENBBANK SAID TO INTERVENE AS PESO HITS 24/USD

As Bloomberg explains, the central bank's policy error earlier this year, in which it cut the rate despite high inflation, has proved horribly costly. Macri's whole project of economic reforms is at stake. Mention of the IMF brings back bad memories for Argentines and part of Macri's appeal was that he promised economic competence. This latest mess shows how hard it can be to return an economy to orthodoxy after years of improvisation and price-controls. Luckily, the next election isn't until next year and the opposition remains divided, but Cristina Fernandez de Kirchner hasn't gone away.

* * *

Update 1: The Argentine Peso is now down 3% to a new record low and the central bank is desperate...

- *ARGENTINE CENBANK SAID TO SELL $200M TO STEM PESO DROP

- *ARGENTINE CENBANK SAID TO BUY MAY LEBACS AS YIELD HITS 50%

* * *

It appears that 1275bps of rate-hikes, hopes for an IMF bailout, and promises-promises from government are not enough to halt the capital flight from Argentina as the Peso just crashed back to a new record low over 23 per USD.

With 7-day repo-rtates at 40.00%, still the currency is collapsing...

Ironically, BNP Paribas says the Peso is too risky to even short, even taking into account the carry return...

> “...we prudently decided to close our tactical short 1m NDF USDARS at 23.75,” strategists led by Gabriel Gersztein write in a report,

> “If anything, this is not the time to be structurally positioned in ARS assets, in our view”

But JPMorgan is even more concerned, warning that the peso may face “disorder” next week if the nation’s central bank struggles to roll over about $30 billion of short-term notes set to expire.

As Bloomberg reports, the central bank is scheduled to auction notes known as Lebacs on Tuesday, in order to roll over about 674 billion pesos ($30 billion) of securities that mature on Wednesday.

The yield on Lebacs due June jumped to 43.6 percent in the secondary market today, forcing the central bank to intervene in secondary markets.

> “A failure in rolling over the maturing Lebac stock would lead to a disorder bid on the dollar and renovated capital outflow,” JPMorgan analysts Diego Pereira and Lucila Barbeito wrote in a note.

> "The recent measures by the central bank, together with Lebac rates above 40 percent suggest the authority would be able to roll a significant share of the stock.”

Yields on ARGENT bonds are spiking with the century bond prices tumbling.

> "Funds are liquidating their positions to cover withdrawals and pressuring the rate,” said CMF Bank Chief Financial Officer Juan Jose Ciro.

> “The local situation is still ugly: the spot exchange rate won’t budge and the rate is firm. We are seeing the tail-end of the crisis, when it starts to hit retail investor."

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Business Finance
Banks - NEC

## Comments

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ZENDOG Fri, 05/11/2018 - 10:39 Permalink

....

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Pearson365 ZENDOG Fri, 05/11/2018 - 11:10 Permalink

In latin American countries they're screwed whether they elect a socialist like Maduro in Venezuela or a banker cock sucker like Macri in Argentina. Usury by bankers applies in all cases. Hang the fuckers.

In reply to Mexico actually has a… by ZENDOG

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Clint Liquor Pearson365 Fri, 05/11/2018 - 11:23 Permalink

Hey Argentinans, got Gold?

In reply to In latin American countries… by Pearson365

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Cautiously Pes… Clint Liquor Fri, 05/11/2018 - 11:30 Permalink

True that. Or .... Hey Argentinians, got Toilet Paper?

In reply to Hey Argentinans, got Gold? by Clint Liquor

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cheka Cautiously Pes… Fri, 05/11/2018 - 12:54 Permalink

what did they do to israel

In reply to True that. Or .... Hey… by Cautiously Pes…

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American Psycho cheka Fri, 05/11/2018 - 12:57 Permalink

coming to a UDS near you. Keep stacking

In reply to what did they do to israel by cheka

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Yellow_Snow Clint Liquor Fri, 05/11/2018 - 12:06 Permalink

Step right up people... 100-yr Argentinian bonds on sale...

In reply to Hey Argentinans, got Gold? by Clint Liquor

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JibjeResearch Yellow_Snow Fri, 05/11/2018 - 12:19 Permalink

lolz ahahahhaahah.... funny shit man.... ahhahahah

In reply to Step right up people... 100… by Yellow_Snow

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DownWithYogaPants JibjeResearch Fri, 05/11/2018 - 12:21 Permalink

It does not help that Latin american politicians are some of the most corrupt individuals I have ever laid eyes on.

Sound money in the form of precious metals // cryptocurrency would be a start towards shutting down all the nonsense.

If you could shut the nonsense down it would be like turning on a light switch.

........and it's Argentina so they have SILVER

In reply to lolz ahahahhaahah.... funny… by JibjeResearch

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charlewar Clint Liquor Fri, 05/11/2018 - 12:39 Permalink

many here in Argentina are fat with US dollars.

In reply to Hey Argentinans, got Gold? by Clint Liquor

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DEMIZEN Clint Liquor Fri, 05/11/2018 - 13:01 Permalink

no, but they will get a military coup I assume.

In reply to Hey Argentinans, got Gold? by Clint Liquor

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Justin Case Pearson365 Fri, 05/11/2018 - 12:41 Permalink

murica's play ground of intervention. Once CIA's largest narcotic suppliers, coordinated with US military. Long history of wrecking the continent.

In reply to In latin American countries… by Pearson365

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divingengineer Fri, 05/11/2018 - 10:41 Permalink

It is starting. It began in Argentina...and spread.

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Yukon Cornholius divingengineer Fri, 05/11/2018 - 12:06 Permalink

Fuck. I really though it was Canada’s turn this time to host the party.

In reply to It is starting. by divingengineer

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Weirdly Yukon Cornholius Fri, 05/11/2018 - 12:44 Permalink

MCAHLA Make CAnada Hockey and Lumberjacks Again

In reply to Fuck. I really though it was… by Yukon Cornholius

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Oldguy05 Fri, 05/11/2018 - 10:43 Permalink

Time for a Falklands vacation!

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ParkAveFlasher Oldguy05 Fri, 05/11/2018 - 10:45 Permalink

Looks like the celebrated and much-anticipated Falklands invasion will be delayed for 2 or 3 generations, again....

In reply to Time for a Falklands… by Oldguy05

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Oldguy05 ParkAveFlasher Fri, 05/11/2018 - 10:49 Permalink

Poor Bob. Sometimes I gotta feel for the guy...a little tiny smidge now an then:)

In reply to Looks like the celebrated… by ParkAveFlasher

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DownWithYogaPants Oldguy05 Fri, 05/11/2018 - 12:25 Permalink

Falklands? What is that? ohhh! You mean the Malvinas!

In reply to Poor Bob. Sometimes I gotta… by Oldguy05

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east of eden Fri, 05/11/2018 - 10:47 Permalink

I’m really fucking sick of your psychopathic manipulations of currencies, wars, police brutality, constant survelliiance

you people are truly fucked, you just don’t fully grasp it yet.

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YourAverageJoe east of eden Fri, 05/11/2018 - 11:01 Permalink

Wadda ya mean by "you people"?

In reply to I’m really fucking sick of… by east of eden

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DownWithYogaPants YourAverageJoe Fri, 05/11/2018 - 12:26 Permalink

You know: Y'all. Youse. Such the like.

In reply to Wadda ya mean by "you people… by YourAverageJoe

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Oldguy05 Fri, 05/11/2018 - 10:55 Permalink

"JPM Warns Of "Disorder" As Notes Come Due."

Dis order says pay your frikkin interest due or else!

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Solio Fri, 05/11/2018 - 10:58 Permalink

WWCT

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Angry Plant Fri, 05/11/2018 - 11:17 Permalink

So what behind the collapse? Is it all those pesos that Argentina created as the counter point to expanded yuan trading? Did those yellow bastards convert pesos to dollars? Thus draining Argentina of it dollar reserves? No way the expansion of yuan trading is all up side for those involved right?

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Money_for_Nothing Angry Plant Fri, 05/11/2018 - 12:47 Permalink

They taxed exports to death to provide a socialist paradise. Twice. Beef first, then soy beans. Now they are beating a dead horse. Wealth creators left the country or are hunkered down.

In reply to So what behind the collapse?… by Angry Plant

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my new username Fri, 05/11/2018 - 11:25 Permalink

Save this and repost it in 2028, 2037, 2042, 2058...
in 1925, Argentina was the world's #5 economy.
Latins plus indiginous = chronic corruption, failure, feudal rates of inequality and mind-numbing stupidity.
The Italians, Spanish and French have the Reverse Midas Touch.

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Clogheen my new username Fri, 05/11/2018 - 12:08 Permalink

The decline of Argentina has indeed been dramatic. There was a time about 100 years ago when the phrase 'rich as an Argentinian' was common. But there are many causes not least the demographics which have changed from about 90% European origin back then down to about 60% today.

Now where does that remind me of?

In reply to Save this and repost it in… by my new username

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JibjeResearch Fri, 05/11/2018 - 11:46 Permalink

Kneel down to your warlords: the USD, the Euro, and the Yuan..

Baitchezzz....

BWahahahahhahahahah

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Weirdly JibjeResearch Fri, 05/11/2018 - 12:46 Permalink

Or just stop printing.

In reply to Kneel down to your warlords:… by JibjeResearch

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Overflow-admin Fri, 05/11/2018 - 12:13 Permalink

¡Que lo parió!

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BandGap Fri, 05/11/2018 - 12:20 Permalink

New vacation destination!

Dominoes falling slowly? Venezuela, Iran, Argentina......

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silverserfer Fri, 05/11/2018 - 12:25 Permalink

South Americans seem to always take the path of least resistance and revert to a junta mentality. Dreams of socialism and democracy fueled with fiat money will NEVER work there.

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Money_for_Nothing Fri, 05/11/2018 - 12:40 Permalink

They could do lots of things that would work. But they would need good leaders which are in short supply right now. In a technical sense the Government needs to be funded by taxes and import duties. Their Government is funded by borrowing outside money and export duties. Just like Venezuela.

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AurorusBorealus Fri, 05/11/2018 - 12:41 Permalink

It is good to know that BNP Paribas has closed out its short on the Peso. Who else was shorting the Peso, I wonder?

In a nation with an annual inflation rate of approximately 25%, a 25% loss of value in the currency in one year, is not a "crash." It is normal, and this has been occurring every year for 15 years, since the Peso was valued at par with the dollar in 2003. That is how we have arrived at 24 Pesos per dollar. There is are many outside the government here who believe that Macri panicked, and that Dujovne's overnight flight to New York demonstrates fear.

Fear, in financial markets, is contagious, and the Argentines are a panicky lot. The fall in the Peso today is probably the result of Argentines responding to Dujovne's midnight journey to New York and selling Peso-denominated assets for dollar denominated assets generally, rather than any specific, calculated assessment by international investment banks pertaining to the government bonds, which is debt denominated almost exclusively in Pesos.

Government spokesmen have done a very good job in the past few days on local media presenting the government's reasons for their actions, answering questions, and displaying a sense of calm. I only hope that there are no more midnight flights to New York, and if there are such flights, that these are done in quiet, not broadcast for hours on local news stations.

I also wonder why the local media, which is owned in no small part by Wall-Street, could talk about nothing earlier in the week except this midnight flight by Dujovne. It almost seemed as if someone was trying to spook the panicky Argentines into selling off Pesos for dollars.

As an aside, this week was not an ideal week to sell panic. Boca was playing for A league championship, and nobody was paying much attention to financial news until today.

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