Argentina’s foreign debt titles recorded on Thursday (18) some of the largest losses between emerging markets, moving to the longest weekly fall sequence since April, amid increased pressure on President Javier Milei’s government.
Investors hoped that the legislative elections of a term of office next month would reinforce Milei’s base in Congress, making room to move forward with his agenda of economic reforms. But, and a series of political setbacks – from the resistance of parliamentarians – operators began to sell Argentine actives.
The titles expanded losses on Thursday after legislators, increasing doubts about their ability to obtain political support before the 26 October vote. The salary papers in 2035 – among the most liquid – fell more than 3 cents per dollar, to the lowest level in almost a year, after five weeks straight from low. The yield jumped to over 16.9%, against 10.6% a month ago.
Free list
10 Small caps to invest in December
The list of actions of promising sectors of the Scholarship
The sales wave also affected the exchange rate. for the first time since currency bands were established in April. The monetary authority sold $ 53 million, according to a daily report on international reserves. At 11:50 am, at local time, the official exchange rate was 1,474 pesos per dollar, near the band’s upper limit.
“The Central Bank will never have a problem responding when the band’s upper limit is hit,” Milei spokesman Manuel Adorni said at a news conference on Thursday.
Currency bands were defined in April, in accordance with the International Monetary Fund (IMF), and gradually expand in 1% per month in both directions, in daily increases. The weight ceiling on Thursday is 1,474.83, but the official trading system only allows bids at intervals of 50 cents. In practice, the Central Bank rounds the value.
Continues after advertising
Even before Wednesday’s intervention, the government had been using other instruments-such as the sale of dollars through the treasure and future exchange contracts-to contain volatility. It also restricted the demand for dollars of brokerages, with Argentina CVM reinterpreting a standard that limits its exposure to currency.
The “combination of currency pressure and legislative defeat” expands uncertainty about the government and increases “the risks of a major loss of reserves to support the current currency regime or a premature and disordered abandonment of it,” said Juan Sola, an analyst at Banco & Co., in a report to clients.
© 2025 Bloomberg L.P.
