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Argentina stocks plunge after US court ruling on debt

Argentine stocks plunged after the US Supreme Court rejected the country's appeal against having to pay hedge fund holders of its bonds, a decision that could pressure government finances.

BUENOS AIRES: Argentine stocks plunged on Monday after the US Supreme Court rejected the country's appeal against having to pay hedge fund holders of its bonds, a decision that could pressure government finances.

The main index of the Buenos Aires market lost six per cent shortly after opening after the Supreme Court effectively backed the hedge funds in their push for payment, despite refusing to take part in the 2005 and 2010 restructurings of the country's debt.

The Merval Buenos Aires index fell more than 530 points, or 6.6 per cent, to 7,513.27.

The dollar was up 0.4 per cent to 11.70 pesos on the Buenos Aires black market.

The decision means that the hedge funds, which picked up Argentine bonds at an extreme discount after the country defaulted in 2001, will be paid 100 per cent of the face value, at least US$1.3 billion, even as the majority of creditors took a deep writedown of their bonds to help the country restructure its finances.

In court Argentina argued that such a ruling would force it back into default, although some analysts argue it can now afford to pay.

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