By Rodrigo Campos and Libby George
NEW YORK/LONDON (Reuters) – Argentina’s international dollar bonds experienced fluctuations on Thursday, rising after U.S. Treasury Secretary Scott Bessent remarked that the U.S. is “not putting money into Argentina.” This statement followed an earlier comment indicating that upcoming face-to-face talks in Washington could significantly enhance the financial support for President Javier Milei’s administration.
The Argentine peso remained relatively stable during the day at approximately 1,424 per dollar, suggesting possible intervention by the treasury. Local stocks saw a boost of 2.5%.
Following Bessent’s initial remarks, bonds gained roughly two cents, but dipped after his “no money” assertion; however, they rebounded to finish the day with an increase of over one cent.
Milei, a right-leaning leader gaining favor from the Trump administration, stated on Wednesday night that part of the discussions with the U.S. involved secondary market bond purchases and the concept of “profit-sharing.”
Last week, Bessent confirmed that the U.S. is negotiating a $20 billion swap line with Argentina’s central bank and is prepared to provide necessary support to the South American nation.
The 2030 bonds were trading up more than a cent by 2030 GMT, having earlier increased by over 2 cents before retracting some of their early gains. Overall, Argentina’s bonds have dropped 15% this year as of Wednesday, after an impressive rise of over 100% in 2024.
The peso has fallen nearly 30% against the dollar year-to-date, even though the government has intervened to support its value in the spot market and maintains certain foreign exchange controls. Analysts regard it as overvalued, and a recent Reuters poll indicates expectations for further devaluation following the midterm elections on October 26.
The IMF, a key proponent of Milei’s economic reforms, emphasized on Thursday that Argentina must establish a fiscal anchor together with a coherent monetary policy and a foreign exchange framework, along with cultivating “broad political backing to ensure the execution of the authorities’ ambitious reform initiatives.”
MARKET INQUIRY INTO TREASURY SUPPORT
Argentina’s financial ecosystem, which saw significant gains following Bessent’s initial support last month, has faced declines recently due to uncertainties regarding U.S. assistance and apprehensions about the future of Milei’s reform agenda in light of the upcoming midterm legislative elections.
The peso, which nearly strengthened by 11% against the dollar last week, has decreased by 6.7% this week to date.
“The market is testing the U.S.’s willingness to assist Argentina,” commented Aaron Gifford, senior emerging market sovereign analyst at T. Rowe Price, noting that the lack of detailed information – in addition to uncertainty stemming from the U.S. government shutdown – is adversely affecting bond prices.
