2023-05-13 05:33:25
The financial conditions of the Argentine economy worsened in April for the third consecutive month and reached the worst level since July 2022, when former minister Martín Guzmán resigned unexpectedly, causing brutal exchange rate turbulence.
The Financial Conditions Index (ICF), published monthly by the Argentine Institute of Finance Executives (IAEF), went from 111.7 to 130.6 in the fourth month of the year, exhibiting increasingly negative indicators.
The monthly loss was not worse because international financial conditions improved: the local issue of the index “went off the rails last month”, they maintain from the entity.
In this sense, the local conditions subindex stood at 145.7 points, with a drop of more than 25 points compared to the 120.2 in March.
This is the worst record for the local ICF since the series began in 2005; the previous floor of October 2022 was 18 points higher, which shows the deterioration of financial indicators in recent months.
The local component of the ICF has been negative since August 2019 without interruption and has been in a stress zone for 45 months in a row, warned the IAEF.
In this case, eight of the ten components fell in April while only two improved month-on-month: stocks and local legislation risk were the ones that managed to improve in a difficult month.
But the variable that caused the index to collapse was the expected depreciation with a resounding fall, while the country risk was the other strongly negative note of the month, according to the entity that groups executives in the finance sector. The inflationary acceleration (product of excess pesos and the exchange instability deepened by the drought) accelerates the depreciation of the local currency, while the lack of confidence triggers the cost of financing to figures that are unmatched in the region.
For its part, the external conditions sub-index went from 8.5 to 15 points and thus remained for the fourth consecutive month in positive territory, called the “comfort zone”.
Six of the ten variables that comprise it improved their performance in April, while four of them fell: US stocks, measured by their volatility, and raw materials were the “stars” of the month, while emerging stocks and currencies also performed well. April, according to the report.
On the negative side, one of the worst variables has to do with the problems of regional banks in the United States.
In this framework, the IAEF warned that the ICF has been in a (negative) stress zone without interruption since August 2019, a month in which local conditions lost more than 63 hit points due to the result of the primary elections in Argentina.
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