ARGENTINA: Merval Sets New Record In The Last Trading Day Of 2017

(RTTNews) - Merval, the benchmark stock market index in Argentina, ended Thursday's last trading session of 2017 above the 30,000-point barrier for the first time in history. The index rose 2.84% to 30,024.24 after the local government increased the inflation target for the next couple of years, but reinforced its commitment to lower fiscal deficits in the future.

Analysts said that the revised economic targets and the fact that President Mauricio Macri managed to pass all the promised reforms in Congress helped traders to maintain their optimism.

The government of Argentina increased the 2018 inflation goal after failing to keep prices inside the 12% to 17% target range this year.

The 2018 inflation target rose from 10% to 15%, while the 2019 goal increased from 5% to 10%. For 2020, the government intends to seek a 5% inflation. Argentina's Finance Minister, Nicolás Dujovne, said that the new targets reflect the country's economic reality.

Annual inflation in Argentina fell to 22.4% in November, from 22.7% in October, prompting the country's central bank to keep its main interest rate unchanged at 28.75%.

The Argentinean government also confirmed that it would strengthen its fiscal effort in 2018 with a primary deficit target of 3.2% of the country's GDP for the next year. In 2017, the primary deficit target was at 4.2%.

Traders also welcome data published earlier Thursday showing that the construction sector activity rose 21.6% in November from a year before and that the industrial sector activity was 3.5% higher in the same comparison.

The Merval had a weekly gain of 3.77%, a monthly rise of 11.59%, a quarterly increase of 15.13% and was 77% up in 2017.

The locally traded US dollar was 4.14% higher, ending the day at 19.20 pesos - a record high. The high seasonal demand for the currency, coupled with adjustments to the inflation target, helped to weaken the peso.