The international financial storm that shook global markets has caught Argentina in a delicate position: in need of dollars, with country risk at three-month highs, and a government forced to tighten rates to avoid a currency run.
Country Risk: The Thermometer That Won't Let Up
Argentina's country risk, as measured by JP Morgan's index, closed on Wednesday, August 19, at 517 basis points—the highest level since May 20. In just one month, the indicator climbed more than 100 points: from the 403 it touched on July 7 to 511 on Tuesday and 517 on Wednesday, according to GMA Capital and JP Morgan data.
This behavior contrasts sharply with other emerging markets. While Argentina decoupled, the Latin American average rose just 5 points and global emerging markets barely moved. "The Argentine movement is idiosyncratic. It's us," summarized Nery Persichini of GMA Capital.
Dollar: Wholesale Rises, Blue Follows
The wholesale dollar rose 2 pesos to close at $1,497—the highest level since August 7—with a cash settlement volume of USD 439.1 million, about 100 million more than Tuesday. Dollar demand regained momentum, forcing the government to maintain its containment strategy.
In the informal market, the blue dollar (parallel exchange rate) rose for a fourth consecutive day to $1,560, after touching an intraday high of $1,565, according to Infobae. The official retail dollar remained at $1,515 at Banco Nación, while the average retail rate was $1,517.54.
Merval: Free Fall and Trader Warnings
The S&P Merval index fell 0.6% in pesos on Wednesday, to 2,874,493 points—its lowest since May 22—accumulating a 12% loss in dollar terms in August (trading at US$1,830, far from the record of US$2,400). Analysts don't rule out further corrections: Gustavo Ber warns it could fall another 15% to US$1,550, while Tomás Sisto Bourel of Fortress Capital sees a technical floor at US$1,500.
Argentine stocks on Wall Street had a mostly positive session Wednesday (Adecoagro +8.1%, Mercado Libre +7.3%, Globant +6.6%, Cresud +5.2%), but sovereign bonds fell 0.4% on average.
The External Factor: Treasury Yields at 2007 Highs
The global trigger was the massive sell-off in US Treasury bonds. The 30-year yield hit 5.33% on Tuesday—the highest since 2007—while the 10-year hovered around 4.7%. US public debt is approaching USD 40 trillion, equivalent to 100% of its GDP.
The US Treasury announced it will double its buybacks of long-term debt starting September 9, which partially eased yields: the 30-year bond fell to 5.19% on Wednesday. But tensions persist due to the US-Iran conflict, the fiscal deficit, the massive corporate issuance tied to the AI boom, and uncertainty over the policies of the new Federal Reserve chairman, Kevin Warsh.
The Cost of Defending the Dollar
To contain the dollar, the BCRA (Central Bank) and the Treasury combined rates, futures operations, and bonds. Open interest in dollar futures contracts at A3 Mercados (formerly Rofex) surged by more than 130,000 contracts in a single session—something not seen since early July.
The benchmark peso rate again approached 30% TNA (annual nominal rate), which makes credit more expensive, punishes peso-denominated bonds, and raises the cost of government refinancing. "Looking at the external context, what worries me more is seeing the peso rate rise again," summarized economist Christian Buteler.
Reserves and BCRA
Despite the context, the Central Bank bought USD 15 million on Wednesday, and gross reserves surpassed USD 50 billion again (USD 50,002 million), boosted by the rise in gold (3.2% to USD 4,561.60 per ounce).
So far this year, accumulated BCRA purchases exceed USD 13.6 billion, though the pace has slowed: in August, it averages just USD 31 million daily, compared to USD 103 million in July.
2027 Elections: The Ghost Haunting the Market
Analysts agree the main factor behind the deterioration isn't just external. "The market is trying to calibrate electoral risk. It was too optimistic, pricing in reelection at 80%," explained Francisco Mattig of One618. Recent polls show erosion in the government's support base, and the opposition is showing greater coordination capacity in Congress.
Barclays warned that the weakness of the non-primary economy (excluding agriculture and mining) is a risk to Milei's popularity: real formal wages are 7% below the first half of 2023, and formal employment fell 3.5% since the fourth quarter of that year.
"The electoral race is just beginning, but economic, financial, and political indicators already show wear with more than 13 months until the elections," summarized Ramiro Blázquez of StoneX.
Key Indicators of the Day
| Indicator | Value | Change |
|---|---|---|
| Country Risk | 517 points | +3 vs Tuesday |
| Wholesale Dollar | $1,497 | +$2 (0.1%) |
| Blue Dollar | $1,560 | +$5 |
| Merval (in pesos) | 2,874,493 pts | -0.6% |
| BCRA Reserves | USD 50,002 million | +USD 410 million |
| 30-Year Treasury | 5.19% | -0.14 p.p. |
Sources: La Política Online, La Nación, Infobae, iProfesional.