Argentine broker apologizes after spreading devaluation rumor

The Economy Ministry confirmed it will start an administrative inquiry into Max Capital

Yesterday, minutes before 6 p.m., a rumor started spreading like wildfire in the Argentine market. Max Capital, a local broker, told some of its clients that it had a hint on why President Alberto Fernández had stepped down from the presidential race that day.

The report by Max Capital said there were “very strong rumors” that, when the market opened on Monday, the government was going to devalue the peso by 50%. Because of that, they added that the Central Bank would not allow any importers to access the official currency market that day. They also hinted at a high-profile resignation in Fernández’s cabinet.

“The doubt locally is whether [Economy Minister Sergio] Massa will stay in office after such a [devaluation].”

The context encouraged such hearsay. The blue-chip swap rate, which started the week at AR$409 to the dollar, reached AR$455 that day. The country is going through exchange stress, as it suffers the consequences of a historic drought that severely damaged its agricultural production and caused a reduction of US$ 20 billion in export revenues, especially from soybean exports. 

Political noise was high during the week, too – libertarian presidential candidate Javier Milei’s “dollarization” campaign was widely commented on, chief presidential advisor Antonio Aracre resigned after his alleged proposal of an exchange rate split was leaked by the media and, finally, Fernández stepped down from the presidential race.

“Monetary, financial, and exchange conditions were ripe for a rise in the dollar. It just needed a triggering factor,” Pablo Repetto, Head of Research at the Aurum broker, told the Herald yesterday.

On Friday, as panic was breaking out and the blue-chip swap rate was reaching record highs, some media outlets started to report that the Economy Ministry was planning a lawsuit against the broker Max Capital. 

On learning of this, Economy Minister Sergio Massa instructed his team to open an investigation into the broker who had sent the report, sources close to the minister confirmed to the Herald late yesterday. 

Today, at 11 a.m., Max Capital released a communiqué apologizing for “having unintentionally participated in the dissemination of an unfounded rumor,” and said that the rumor “does not represent” the company’s opinion on the economy.

“Its disclosure to local and foreign clients was the result of an involuntary mistake made by an employee of the company, who acted on his own account on the basis of false rumors,” they said. They also stated that the report was not based on any “reliable source of information” nor had it been discussed with government officials.

“We are aware that, in a context like the present, the unwise reproduction of unsubstantiated rumors increases the wave of rumors and generates greater uncertainty and exchange rate pressures, with the consequent negative impact on Argentine bond and stock prices, as well as financial dollars,” they said, before offering “sincere” apologies.

Sources in the Economy Ministry told the Herald that Argentina’s National Securities Commission (CNV, for its Spanish acronym) will issue an administrative inquiry to analyze the foreign exchange futures operation volume, and whether the broker firm could have made extra money on commissions by pushing their clients to operate in a certain way.

However, they will not pursue a lawsuit against Max Capital, as was originally reported.
“They already apologized. We expected them to publish that they had spread rumors,” one of the sources told the Herald. “And they did.”

Written by Estefanía Pozzo and Facundo Iglesia


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