Argentine peso 'non deliverable forward' (NDF) markets looked to be slowing coming back to life on Tuesday investors said, after a key emerging markets traders group backed trading as long as banks were willing to show prices.
NDF markets are one of the main ways investors hedge currency positions, but they were effectively frozen last month after Buenos Aires introduced capital controls and caused a parallel peso rate to spring up.
Goldman Sachs, PIMCO, Cargill and others began notifying the Emerging Market Traders Association (EMTA) that sets trading guidelines, of the divergence, because of potential disputes over the FX rates. That left markets waiting for EMTA's view and Monday's judgement was that trading could go ahead as long as banks were willing to show prices.
Jan Dehn at emerging market Ashmore called it "very good news" as under the old EMTA rules, trading was blocked.
"This rule has now been changed, so that the market can trade as long as someone is willing to show prices. Some banks are already starting to show prices. The market (NDF) is therefore now coming back," he said.
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