argentine Markets Surge Following US Treasury Support, Dollar Retreats & Risk Drops
Buenos Aires, Argentina - Argentine financial markets experienced a significant shift today, driven by a show of support from the US Treasury and resulting in a decline in dollar values and a ample drop in country risk. The developments effectively reversed gains seen in the preceding two weeks.
The official dollar fell 3.1% today. Parallel dollar rates also saw considerable declines: the blue dollar (unofficial) dropped $130, representing an 8.5% decrease, while the MEP dollar closed at $1370.99, down $56.52 (-4%) from yesterday. The counted with liquidation (CCL) dollar fell to $1375.45, a decrease of $65.42 (-4.5%). Over the week, the MEP dollar has fallen $180 (-11.6%) and the CCL dollar $191.61 (-12.23%).
This positive movement follows an announcement of support from the US Treasury, prompting analysts to question whether this could pave the way for the Central Bank to “start a virtuous path of accumulation of reserves with a flexible exchange rate,” potentially leading to the elimination of exchange bands and remaining exchange controls on stocks, according to Juan Manuel Franco, chief economist of Grupo SBS.
the country risk index,calculated by JP Morgan,fell 82 basis points to 1007,a 7.53% decrease from Monday. This follows a brief surge above 1500 basis points on Friday. the decline is attributed to a rebound in sovereign debt bonds, alleviating concerns about the government’s ability to meet its 2026 maturities. Specifically, AL41D bonds rose 8.42% and GD29D bonds jumped 9.17%.
The Buenos aires stock exchange (Merval) rose 1.6% in pesos, closing at 1,893,328 units. Adjusted for the CCL dollar, this equates to US $1307, a 4% increase in dollar terms. Leading gains were Metrogas (+15.4%), Byma (+11.9%), Commercial Company of the Silver (+8.6%), and Transener (+8.2%).
Delphos Investment noted that yesterday’s 16% rise in the Merval (in dollar terms) was the largest as Javier Milei’s victory in the November 2023 ballot, and before that, since 2009. They cautioned, however, that the rally “reflects more a technical relief in a market dominated by pessimism and panic than a trend change.”
Argentine ADRs listed on the New York Stock Exchange also showed positive momentum, continuing a 24% rise from yesterday. Edenor led the gains, advancing 8.9%, followed by YPF (+5.2%), Central Puerto (+4.6%), Banco Macro (+3.5%), and BBVA (+2.9%).
