Argentina's parallel peso strengthens on new economic measures, stock index plummets

BUENOS AIRES (Reuters) - The Argentine parallel market peso appreciated against the U.S. dollar on Monday while the local stock market suffered, after new economic measures introduced by President Javier Milei's government over the weekend took effect.

Argentina's economy minister outlined on Saturday a plan to stop expanding the monetary base in an effort to combat inflation. The following day he announced a $1.5 billion purchase from the central bank to pay bond interest due in January.

The peso extended its gains to 6.01% at 1,415 pesos per dollar, after strengthening around 2% in early trading.

The gap between the black market "blue" exchange rate and the official rate narrowed slightly, and stood at 53%, after hitting some 60% last week.

"The announced measures can be taken as a positive, only if the gap falls significantly in the coming days and inflation plummets in the coming months," said local settlement and clearing agent Neix.

The benchmark Merval plummeted over 12% while over-the-counter bonds fell 3%.

(Reporting by Walter Bianchi and Jorge Otaola; Writing by Aida Pelaez-Fernandez; Editing by Kylie Madry and Richard Chang)