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Argentina's NDF Mart Forges Comeback

Trading volumes on the U.S. dollar/Argentina peso non-deliverable forward market started recovering last week. Foreign exchange options traders in New York reported NDF volume growing to about 10 trades a day from zero around year-end when market players were backing away in the wake of the country's political and economic chaos (DW, 12/24). The average notional size of last week's trades was USD1 million.

A typical trade was a one-month forward with an exchange rate around ARS2.30, traders said. Spot was at ARS1.60. Hedge funds and institutional investors were the most active in the slow market as they looked to protect their peso denominated investments by hedging against the possibility of the peso weakening further.

In addition, U.S. corporates with peso exposure that had been denied a payout on their NDF contracts--when they matured in late December and early January because the forward dollar/peso rate had been suspended--were settled last week at a forward rate of ARS1.5750 (DW, 1/4). The rate applies to contracts that matured between Dec. 21 and Jan. 11. The rate was agreed to after the Chicago Mercantile Exchange conducted a week long survey that polled institutions involved in the trade.

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