Why Mercadolibre, YPF SA, and Grupo Supervielle SA Stocks All Dropped Today

What happened

Grupo Supervielle SA (NYSE: SUPV) is a retail bank based in Buenos Aires, Argentina.

YPF SA (NYSE: YPF) produces oil and gas -- and also lives in Buenos Aires.

And Mercadolibre (NASDAQ: MELI) -- probably the best-known name on this list -- is the Latin American equivalent of eBay here in the U.S. And yes, you guessed it -- Mercadolibre is headquartered in Buenos Aires as well.

What's the common denominator among these three stocks? Their location, obviously, but also the fact that they all saw their stock market prices crushed on Thursday, with Supervielle down 5.7%, YPF off 8.8%, and Mercadolibre hit hardest of all -- down 9.9%.

So what

Now for the reason why all of these stocks are falling: On Thursday morning, Argentina's central bank announced it is hiking benchmark interest rates in the country from 45% to 60%, a one-third increase in interest rates that gives Argentina the highest (official) interest rate in the world, according to CBC Radio-Canada.

Argentina made the move in an effort to stem the slide in the value of its national currency, the Argentine peso, and curtail inflation rates that are approaching 30% per year -- but things aren't working out quite as planned. Instead of stabilizing, the peso dropped 15% against the U.S. dollar Thursday, a drop twice the size of the 7% in value it lost on Wednesday.

As you can see from the knock-on effects on share prices at Grupo Supervielle, YPF, and Mercadolibre, this isn't particularly good news for the country's stock market, either.

Now what

Argentine President Mauricio Macri can't be pleased with any of this, but he's not sitting on his hands, either. In addition to the interest rate move, he's asking the International Monetary Fund to accelerate the release of funds from a $50 billion backup financing agreement he had already worked out with the IMF, and IMF Managing Director Christine Lagarde says she's willing to consider tweaking "the phasing of the financial program" to accommodate. In theory, once these funds become available, investor fears that Argentina will need to print more money or take on more debt to pay its bills should ease, and the inflation and devaluation crises should be solved.

Investors can only hope that plan works out better than this latest one did.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends MercadoLibre. The Motley Fool has a disclosure policy.