Argentina Assets Surge Following Pledge of robust U.S. Support
Buenos Aires – Argentine financial assets experienced a dramatic rally following comments from U.S. Ambassador to Argentina, Marc Bessent, detailing strong U.S. backing for President Javier MileiS reforms. the surge marks a important turnaround from recent declines, with bonds and the peso posting ample gains.
Argentina’s 2030 bond rose 3.5 cents to trade at 74.78 cents on the dollar, while the Global X Argentina stocks ETF added 2%, led by gains in bank stocks. The local stock benchmark rose 1.5%, after earlier climbing as much as 6.6%.The peso strengthened nearly 2% on the day, bringing its weekly gains against the U.S. dollar to 10%.
“What’s happened for Argentina was beyond what any analyst could have imagined just a few weeks ago,” said Alejo Czerwonko, chief investment officer for emerging markets in the Americas at UBS. “It stands among the strongest examples of U.S. Treasury backing in the history of emerging markets.”
the rebound follows a period of significant pressure, with bonds falling as much as 20% year-to-date and the peso nearing the lower limit of a band established in April under a $20 billion International Monetary Fund program. The central bank had spent over $1 billion last week defending the currency.
Analysts emphasize the need for continued policy adjustments. “We would like to see a policy shift that allows for the central bank to accumulate international reserves aggressively,” said Alexis Roach, emerging markets sovereign analyst at Payden & Rygel.”This should translate into changing the monetary framework to allow for more currency adaptability.”
Despite the positive momentum, some caution remains. Aberdeen fund manager Kevin Daly noted the sharp rebound limits further upside ahead of the midterm elections, with focus shifting to Milei‘s party’s performance and the potential for peso devaluation post-vote. “This U.S. (support) is coming to the rescue but that alone won’t save Argentina. It has to take steps too,” Daly said.
experts suggest the U.S. support significantly reduces tail risks and should sustain the rally in the near term. Aaron Gifford, senior EM sovereign analyst at T. Rowe Price, stated the support should cover foreign exchange reserve accumulation, a key concern, despite a recent dip in overall growth.
