Argentine Financial Assets Surge in Response to U.S. Support Ahead of Elections
By Rodrigo Campos
NEW YORK (Reuters) – Argentine financial markets experienced a significant surge on Monday, with stocks witnessing their largest rise in six months. International dollar bonds increased by over 6 cents, and the Argentine peso gained strength. This rally followed the U.S. government’s commitment to fully back Argentina’s right-wing administration ahead of critical midterm elections scheduled for next month.
U.S. Treasury Secretary Scott Bessent stated that “all options” are available for stabilizing Argentina. This includes potential swap lines and direct currency purchases, highlighting President Donald Trump‘s endorsement of Argentine President Javier Milei and his economic team.
Bessent made these remarks to reporters shortly after announcing U.S. support for Argentina via social media, emphasizing that any forthcoming U.S. actions would be “large and forceful.” However, he noted that no specific steps would be taken until he and Trump hold discussions with Milei in New York on Tuesday.
Concerns About Investor Confidence
Argentina’s markets had recently suffered, with international bonds plunging over 20% year-to-date as of last Friday. The peso was approaching its weaker limit within a predefined band, as corruption allegations against members of Milei’s administration and a larger-than-expected defeat in local elections in Buenos Aires led to growing concerns about Milei’s capability to transform the economy.
“Argentina’s assets were in desperate need of a circuit breaker – and they just got one,” stated Alejo Czerwonko, Chief Investment Officer for emerging markets in the Americas at UBS. “Bessent’s intervention carries substantial influence at this critical time, giving the Milei administration a vital opportunity to realign ahead of October’s midterms.”
A favorable outcome in the upcoming elections could significantly alleviate investor anxiety, particularly in the wake of the recent Buenos Aires electoral results, Czerwonko added.
Market Rally: A Much-Needed Rebound
An index tracking Argentine stocks listed on U.S. exchanges surged by 14%, while the local benchmark index appreciated by 7% on Monday after experiencing a notable decline of more than 15% over the preceding two weeks.
Furthermore, earlier today, the Argentine government announced it would eliminate export taxes on all grains through next month, a move aimed at increasing sales and addressing the demand for dollars from institutional investors. This tax removal is set to last beyond the midterm elections on October 26.
“Is this the ‘whatever it takes’ moment for Argentina?” questioned Armando Armenta, a senior economist at AllianceBernstein, referencing the pivotal support offered by former ECB President Mario Draghi to sustain the euro in 2012. “It seems that Milei is receiving the necessary backing to prevent a financial crisis ahead of the midterm elections and to ensure a smoother transition into 2026.”
