Argentina’s peso strengthened, snapping a five-day losing streak amid continued market intervention by both the local and US governments.<\/p>\n
President Javier Milei and US Treasury Secretary Scott Bessent are trying to stave off a run on the currency with just days to go before a crucial midterm vote for the libertarian Argentine leader. The peso came within cents of breaching its trading band Tuesday, prompting Argentina’s Central Bank to step in to prop it up for the first time in about a month. The US Treasury also intervened, according to people with knowledge of the matter.<\/p>\n
The currency gained as much as 0.6 percent in early trading Wednesday before paring the advance to just 0.2 percent to trade around 1,487 pesos per dollar. The weakest limit of the trading band, which expands each day, stands at 1,491.6. Argentina\u2019s dollar bonds were down across the curve, with notes due in 2035 falling by one cent to trade at 55 cents on the dollar, according to indicative pricing data compiled by Bloomberg<\/em>.<\/p>\n Bessent confirmed the signing of a US$20-billion swap line with Argentina a day earlier, calling it \u201ca bridge to a better economic future for Argentina, not a bailout.\u201d His efforts to line up the same amount of private-sector funding for the crisis-prone South American nation, however, remain unfulfilled as banks seek clarity on terms, structure and collateral.\u00a0<\/p>\n Draining the US$20-billion swap line to defend Argentina\u2019s currency \u201ccould quickly tip the scales unfavourably,\u201d Juan Manuel Pazos, an economist at local broker One618, wrote in a report this week. \u201cIf the intention is to uphold the FX regime for some time, then the second US$20-billion bailout from banks would probably be necessary.\u201d<\/p>\n Milei\u2019s economy chief, Luis Caputo, reiterated in a post on X Wednesday that there would be no changes to foreign-exchange policy. The peso\u2019s trading bands, established in April as part of Argentina\u2019s agreement with the International Monetary Fund, are increasingly viewed by investors as supporting an overvalued currency.\u00a0<\/p>\n Traders are watching potential moves in Milei\u2019s Cabinet. Argentine Foreign Minister Gerardo Werthein, who has been a key participant in talks with the US, offered his resignation on Tuesday evening, according to a report by local newspaper La Naci\u00f3n<\/em>, citing unnamed government sources.\u00a0<\/p>\n Political tension is also intensifying in the United States. In response to Democratic Senator Elizabeth Warren\u2019s criticism of US spending during the government shutdown, Bessent described the Trump administration\u2019s effort to prop up Argentina as \u201cmission critical.\u201d The use of Treasury resources \u201cprovides targeted backing to a key ally that has pursued fiscally responsible policies and economic freedom,\u201d he said in a letter to Warren dated Tuesday.<\/p>\n Argentine markets, meanwhile, are showing signs of exhaustion from the barrage of social media messages posted by both US and Argentine authorities, according to Joaqu\u00edn Bagues, managing director at local broker Grit Capital Group. \u201cRight now is pay per view,\u201d he said. \u201cThe market will buy in when it has more certainty.\u201d<\/p>\n by Nicolle Yapur, Bloomberg<\/p>\n \t\t\t\t\t\t\t\t<\/p>\n