New York — Argentine financial assets rallied on Monday, with US-traded stocks up over 10%, international dollar bonds up and the peso strengthening after Washington said “all options are on the table” for the US to support Argentina’s government.
US treasury secretary Scott Bessent said swap lines, direct currency purchases, and purchases of US dollar-denominated government debt could be used in support of Argentina, which he labelled a “systemically important US ally in Latin America”.
Bessent said any US action to help stabilise Argentina’s currency would be “large and forceful” and that Washington would not impose any new conditions or demands on such steps.
He said Argentina President Javier Milei and US President Donald Trump would meet on Tuesday, and details of the support would be available after the meeting.
Earlier, Argentina’s government said it would remove export taxes on all grains through next month, aiming to boost sales and the supply of dollars to meet demand from institutional investors. The dates mean the tax will be removed past a key midterm election on October 26.
Argentina’s assets were in desperate need of a circuit breaker — and they just got one.
— Alejo Czerwonko
UBS
Argentina’s markets have fallen sharply over the past weeks, with international bonds down more than 20% for the year through Friday.
The peso has been pressing against the weaker limit of a band set months ago, as corruption allegations inside Milei’s circle and a larger-than-expected loss in a local election in Buenos Aires triggered investor concern over Milei’s ability to reshape the economy.
“Argentina’s assets were in desperate need of a circuit breaker — and they just got one,” said Alejo Czerwonko, chief investment officer for emerging markets in the Americas at UBS. “Bessent’s intervention carries outsize weight at this fragile juncture. It provides the Milei administration with a critical window to reorient ahead of October’s midterms.”
A favourable political outcome for the government in the October election would go a long way towards containing the investor anxiety ignited by the province of Buenos Aires vote earlier this month, Czerwonko added.
An index of Argentine stocks traded in US exchanges rose 13% and the local benchmark gained 6% Monday after falling more than 15% in two weeks.
The 2046 sovereign bond was up 8.5c at 66c on the dollar, data from MarketAxess showed. The peso strengthened 2.7% at 1,436 per dollar, after Argentina’s central bank last week burnt through more than $1bn of reserves to defend it.
Despite the rally in Eurobonds, yields were still relatively high between 16% and 26% across maturities. Investors were still focused on Milei’s willingness to change course, which has been tested both in the streets and by markets.
“Depending on the scope and nature, a financial backstop from the US, combined with the export tax measures announced this morning, could help Milei more effectively manage within the current FX framework between now and the (midterms),” said Kathryn Exum, co-head of sovereign research at Gramercy Funds Management.
This could reduce the rate at which authorities burn through precious reserves, which at current levels is unsustainable, Exum added.
US potential support to Argentina is likely to offer only temporary relief for pressured assets, Pramol Dhawan, head of emerging market portfolio management at PIMCO, said.
“The country doesn’t generate enough dollars at current exchange rates,” he said. “Markets are testing the currency regime's viability and expect difficult adjustments — particularly currency devaluation — to rebalance the economy.”
He said that the adjustment, alongside continued US and IMF support, “could give the country necessary breathing room for fundamental reforms”.
Reuters
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