Buenos Aires (AFP)

The Buenos Aires Stock Exchange tumbled 11.90% on Tuesday, in response to the entry into force of the exchange control imposed by the Argentine government to try to reassure markets and savers, while the inflation forecast in that country in recession has been revised upwards.

The Merval index was 23,079 points. The shares of banks and energy companies fell sharply, as did the Argentinian shares listed on Wall Street. Monday, the index had jumped 6.45%, but the volume of transactions was limited because of holiday in the United States.

The Argentine peso, which had appreciated from 5.38% Monday at the close, to 58.41 pesos to the dollar, was stable Tuesday at 58.49 pesos to the dollar, a slight increase of 0 , 03%.

The exchange control measures taken by the government of Liberal President Mauricio Macri - which will remain in force until December 31 - are intended to reassure the markets in the face of the worsening economic crisis, which has notably led to a sharp depreciation of the currency. Argentina, by some 20% in three weeks.

And for the Central Bank of the South American country, which published Tuesday its estimates, the economic crisis should not settle: it forecasts an inflation that should be 55% and a GDP which should fall by 2.5% in 2019.

The financial institution previously predicted inflation of 40% and a recession of 1.4%.

- "Open question" -

The decree published Sunday in the Argentine Official Bulletin requires exporting companies to change pesos dollars between five and fifteen business days after receipt, or 180 days after the export of goods.

Individuals may not make transfers abroad of more than $ 10,000, nor purchase foreign currency for an amount greater than this amount without authorization from the Central Bank of Argentina (BCRA).

On Monday, first rows of anxious savers were formed at the doors of banks to withdraw their dollars.

The government's decision has "discouraged demand for foreign currency, but the behavior of the stock market is distinct," said AFP Matias Rajnerman, consulting firm Ecolatina. "The financial problems of stocks and bonds will continue, while the foreign exchange market for now will be contained," he added.

Argentina has also asked the International Monetary Fund (IMF) to reschedule its debt by $ 57 billion. According to the agreement signed in 2018, the first repayments must occur in 2021, but the prospect of a change of government and the specter of a lack of payment make the markets nervous.

Center-left Peronist Alberto Fernandez, a critic of the IMF program, is now a favorite for the presidential election on October 27, after his broad victory in the primary elections, where he won 47% of the vote, far ahead of Mauricio Macri (32). %), who is seeking a second term.

It remains "an open question" that generates great uncertainty and causes volatility: "What economic policy will we have under the next government?" Asked Tiago Severo, an analyst at Goldman Sachs in New York.

The financial evaluation agency Fitch raised on his side Wednesday at "CC" the note of the Argentine debt, lowered five days ago to "RD" (partial payment default). It considered that the State had remedied, by payment, the threat to some of its creditors not to be repaid by the due date.

Fitch, however, remains pessimistic for the holders of Argentine debt. "A new default or debt restructuring of any kind is likely," the agency said in a statement, noting the "weeks of extreme financial instability" since the August 11 primary elections.

The Argentinean economy, in recession since 2018, has one of the highest inflations in the world (25.1% between January and July, 54.4% over the last 12 months), a drop in consumption, closures of shops and an increase in poverty (32% in 2018) and unemployment (10.1% this year).

And for 2020, the central bank has forecast a GDP decline of 1.1%, which contrasts sharply with the previous publication in July, when it projected a growth of 2%.

© 2019 AFP