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 โArgentina, Marc Bessent, detailing strong U.S. backing for โPresident Javier MileiS reforms. โthe surge โฃmarks 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 74.78โ cents on theโค dollar, while the Global X Argentinaโ stocks ETF added 2%, led by gains in bank stocks. The local stock benchmark โrose 1.5%, after earlier climbing as much as 6.6%.The peso strengthenedโข nearly 2% on the day, bringing its weekly gains against the โคU.S. dollar to 10%.
“What’s โฃhappened โคfor โArgentina was beyond what any analyst โฃcould have imagined justโค a few weeks ago,” said Alejo Czerwonko, chief investment officer for emerging markets in the Americas at UBS.โค “It stands โamong the strongest examples of U.S. Treasury backingโข in theโฃ history of emerging markets.”
the rebound follows a period of significant pressure, withโ bonds falling as much as 20% year-to-date โand 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 overโ $1 billion last weekโ defending the currency.
Analysts emphasize the need for continued policy adjustments. “We would like to see a policy shiftโ that allows for the central bankโค to accumulate international reserves aggressively,” saidโ Alexis Roach, emerging markets sovereign analyst at Payden โข& Rygel.”This should translate โinto changing the monetary framework to allow for more currency adaptability.”
Despite the positive momentum,โ some caution remains. Aberdeenโ fundโ 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 โdevaluation post-vote. “This U.S. (support) isโ coming to the rescue but that alone won’t save Argentina. Itโฃ has to take steps too,” Daly said.
experts โคsuggest the โคU.S. support significantly reducesโข tail risks and should sustain theโ rally in the near term. Aaron Gifford, senior EM sovereign analyst atโค T. Rowe Price,โฃ stated the support should cover foreign exchange reserve accumulation, a key concern, despite a recent dip in overall growth.
