Background on Key Figures and Context
Scott Bessent, the United States Secretary of the Treasury, expressed Washington’s readiness to take necessary actions to aid Argentina’s financial stability. This statement had a significant impact on the Argentine economy, causing a surge in both the Buenos Aires Stock Exchange and the Argentine Peso.
Javier Milei, the President of Argentina, is set to meet with US President Donald Trump in New York following the United Nations General Assembly. Amidst ongoing financial pressures, Milei’s government announced the temporary elimination of export taxes on all grains until late October, aiming to increase the availability of US dollars before crucial mid-term elections.
Market Reactions and Government Measures
The Argentine Peso appreciated by 4.37% against the US dollar, gaining 64.49 pesos and reaching 1,410.26 units. This recovery comes after the currency plummeted to 1,476 pesos per dollar, compelling the Banco Central de la República Argentina (BCRA) to intervene by selling US dollars.
On Friday, the BCRA conducted its tenth largest US dollar sale in history, highlighting the extent of their intervention to stabilize the currency.
Bessent’s remarks precede Milei’s meeting with Trump and come as the Argentine government implements measures to bolster its financial position before the mid-term elections.
Stock Market and Bond Performance
The S&P Merval index surged 7.55% to 1,811,038.73 points, ending a four-session losing streak.
- Transener, an electricity transmission company, led the gains with a 21.22% increase.
- Transportadora de Gas del Norte, another energy-related firm, followed closely with a 20.26% rise.
- Sociedad Comercial del Plata also experienced a significant 20% gain.
Among the four Argentine banks listed on Wall Street—Grupo Supervielle, Grupo Financiero Galicia, BBVA Argentina, and Banco Macro—all saw stock prices rise between 20% and 24%.
According to Alejo Czerwonko, Director of Emerging Market Investments at UBS, “Argentine assets urgently needed a halt, and they just received it. Bessent’s intervention carries immense weight in this delicate situation, providing the Milei administration with a crucial opportunity to reorient itself before October’s mid-term elections.”
Furthermore, Argentine sovereign bonds denominated in US dollars, which had lost between 21% and 29% this month, experienced gains ranging from 16.4% to 23.3% on Monday.
Key Questions and Answers
- Who is Scott Bessent? Scott Bessent is the United States Secretary of the Treasury who expressed Washington’s willingness to support Argentina’s financial stability.
- What measures did the Argentine government take? The Milei administration temporarily eliminated export taxes on all grains and implemented currency interventions by the Banco Central de la República Argentina (BCRA).
- How did the stock market and bond performance react to these developments? The Argentine stock market, led by the S&P Merval index, and sovereign bonds denominated in US dollars experienced significant gains following Bessent’s remarks and government actions.
