Argentina’s international bonds experienced a notable uptick, and the peso gained approximately 5% against the dollar in anticipation of a pivotal meeting between U.S. President Donald Trump and Argentine President Javier Milei. The discussions are expected to focus on U.S. support for Milei’s economic plan, reflecting a potential shift in financial collaboration between the two nations.
This surge in Argentine assets follows a rally initiated on Monday when U.S. Treasury Secretary Scott Bessent mentioned that “all options” of support were being considered for Argentina. This includes proposals for swap lines and the possibility of direct currency purchases from the U.S., which stirred investor optimism.
On Tuesday, Argentine bonds saw a temporary increase of as much as 2.3 cents before some of those gains retreated, yet they still remained up by over 1 cent on the dollar, according to MarketAxess data. The peso’s resurgence, showing a 3.4% rise against the dollar, echoes a substantial nearly 5% gain observed on Monday. In contrast, local stocks displayed mixed results: the local benchmark fell by 2% following a near 8% rise the previous day, while stocks traded on U.S. exchanges posted a 1% increase.
Investors remain curious about the specifics of the U.S. support that will be offered, given the recent volatile history of Argentina’s peso, which saw significant losses last week. The central bank’s aggressive measures led to the depletion of more than $1 billion of its reserves in an effort to stabilize the currency.
Strategists, such as Simon Waever from Morgan Stanley, emphasized the importance of any forthcoming support from the U.S. “The U.S. support announcement is significant,” he stated, suggesting that a loan tied to future U.S. investments might be more feasible than direct currency purchases or a swap facility.
Earlier this year, Argentina had renewed a $5 billion swap line with China’s central bank, contributing to a larger $18 billion facility that has played a critical role in bolstering the nation’s reserves, yet has drawn criticism from Washington.
Since Milei assumed the presidency in December 2023 and initiated an ambitious reform agenda, investor sentiment toward Argentina has improved. However, recent weeks have seen a decline in market confidence, triggered by corruption allegations surrounding Milei’s administration and a disappointing performance in local elections in Buenos Aires. These events raised concerns regarding Milei’s capacity to implement the essential economic changes needed to stabilize Argentina’s financial landscape.
