Interest Rates on Performance of Government Securities at the Buenos Aires Stock Exchange, Argentina
Abstract
Government securities usually are regarded as a valuable and reliable mechanism for modern investments. This is because they provide the funding for domestic government with a low return on yield with time. The enable the state to raise finances necessary for development agenda of the government. In addition, it plays a crucial role of mobilization of resources and allocation in the economy. The relationship between changes in interest rates and performance of the securities returns is an important aspect of the economy as it has a greater bearing on the overall performance of the economy and shows the level of confidence of investors in that economy. This is even more important in the current financial setup characterized by increased international trade and the integration of the global financial markets. The objective of the study was to determine the effect of interest rates on the performance of bonds at the Buenos Aires Stock Exchange (BCBA) in Argentina. Significant extent. The study found that inflation rate had a negative correlation with stock market returns at the BCBA and we can therefore conclude that higher inflation rates tends to discourage performance of bonds listed at the BCBA leading. Exchange rates were also found to be negatively related to stock market returns at the BCBA and therefore an increase in exchange rates to a decrease in stock market returns at the BCBA. The study established that although there is a negative influence of interest rates on bond performance at the BCBA. This study recommends that there is need for central bank to regulate the interest rate levels prevailing in the country bearing in mind that they influence government securities. The investigation found that trade rates and swelling rates have a negative association with bond execution recorded at the BCBA. The factors were additionally observed to be significant determinants of bond execution. This investigation suggests that policy formulators should focus on the common rates of these chose autonomous factors as they can contrarily influence bond yield recorded at the Buenos Aires Stock Exchange.
Keywords: Interest Rates, Economic growth, Inflation Rate, Exchange Rate, Buenos Aires Stock Exchange & Argentina.
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