MercoPress. South Atlantic News Agency

Bessent steps in to keep dollar from soaring in Argentina

El cambio de tendencia en el mercado se produjo por la tarde, cuando Bessent anunció que volvería a vender dólares

Argentina's financial markets bounced back on Wednesday following an intervention and new statements from US Secretary of the Treasury Scott Bessent after initial fearful trading resulting from US President Donald Trump's conditional endorsement of the South American country.

On Tuesday, the Republican leader announced from the White House that he would only be “generous” if President Javier Milei's La Libertad Avanza (LLA) prevailed in the upcoming midterms and the head of State was reelected in 2027.

Bessent against bought pesos on Wednesday on the local foreign exchange market (MULC) and hinted at a potentially massive financial aid package, which could reach US$40 billion, combining the anticipated swap with new credit lines being negotiated with major banks.

This news caused the official dollar to retreat from its daily high of AR$1415 to a low of AR$1395, moderating the exchange rate pressure just 11 days before the polls. Hence, the market ended the day with significant gains in equities and a higher close for the currency despite the morning volatility and initial pressure.

The official dollar closed at AR$1405 (sale), an AR$20 increase from the previous day, while the “blue” quotation (a euphemism for “black market”) sold at AR$1450, AR$30 up from the day prior.

Simultaneously, Argentine stocks on Wall Street soared, with gains of up to 11%, led by Central Puerto, followed by Banco Supervielle and Banco Macro as dollar bonds rebounded by up to 4% (averaging 0.2%). However, the Country Risk index remained above 1000 points.

Separately, the local Treasury faced a challenging debt auction, renewing just 45.7% of its debt, which indicated persistent fiscal strain despite the positive market reaction to the US support news amid rising peso rates.