The country riks decreased and finished in 692 points
The index closed the month at 692 points, as was measured by the U.S. investment bank JP Morgan, and it is less than a half than the one reached nearly two years ago, in the outbreak of the crisis originated on Wall Street.
This implies that the interest rate required if Argentina needs to request outside funding would be nearly 7% more than the required today to U.S. securities.
The recent decline of Argentine country risk of 145 points in July, reflects, according to market analysts, the effect of the increasing demand for government bonds, after the regularization of almost 93% of debt in default (considering the exchange of 2005 and the newer).
The current level of country risk is similar to the one observed in early September 2008, when the crisis originated with the default of the subprime loans in developed countries began to worsen.
The capital flight was influenced by the upward trend recorded, which also responded to the escalation of conflict of entrepreneurs of the countryside against the government, due to the withholding of grain exports.
The expectation of the continued downward trend of the country risk extends to the whole economy, particularly its impact on the cost of financing and the potential to bolster investment and consumption.
If the country risk rating decreases, the cost of borrowing will also be less and that leads to a greater power to influence on economic policies by the government and lower the risk of default.
The indicator tries to measure the degree of danger of default involving a country from the viewpoint of foreign investors.
However, the ranking of JP Morgan is not the only, and experts agree, moreover, that this is a simplified and imperfect parameter to assess the evolution of the economy.
Source: Telam
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