Despite attempts to moderate volatility, the market remains cautious and the dollar remains under pressure in the final stretch towards the elections.
Despite the Treasury’s intervention, the dollar remains firm and the market awaits key definitions. Although the United States Treasury confirmed that it intervened in the market with purchases of pesos, The demand for dollars does not subside. In parallel, the economist Scott Bessent assured that The bailout to Argentina will reach US$40,000 million. Everything occurs in a context of marked volatility, with sudden movements not only in the exchange rate but also in short-term rates: surety and REPO rates reached over 100%.
In this scenario, Expectation grows for the announcements scheduled for this Thursdaywhich would include a possible trade agreement between the United States and Argentina. Added to this is the confirmation of the head of the IDB, Ilan Goldfajn, that the organization will allocate finally US$10 billion in assistance to the country over the next three years.
The key data from Wednesday’s session was that the Treasury managed to renew only 45.7% of the maturities, releasing more than $2 trillion to the market. This liquidity could bring some relief to peso rates, although it does not guarantee exchange calm. With just six wheels left before the general elections, the upward pressure on the dollar—which is around $1,400—could intensify.
Beyond this point, the intervention of the United States Treasury to contain volatility was insufficient: the market stood up to him and maintained the buying pressure. In this framework, the next few days will be decisive in anticipating the next movements, although for now the announcements fail to dissipate the climate of uncertainty that dominates the square.
The truth is that the Trump-Milei meeting setbackwhich Bessent seemed to counteract with its new advertisement, joined the already installed doubts about the future of the exchange rate scheme after the elections on October 26. Although the minister Luis Caputo ratified the continuity of the current gang scheme, the city sees an uncertain scenario. For example, since Wall Streetthe bank Morgan Stanley He outlined three scenarios for the dollar after the elections: all include an exchange rate jump and the most optimistic places the currency at $1,700 by the end of the year.
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The dollar and pre-election volatility
Until before the intervention of the US Treasury last Thursday, the expectation of a devaluation after the elections was practically a market consensus. However, the sale of dollars by the organization in charge of Bessent, and the fact that he even opened an account to operate in the futures market, sparked concern. doubt about whether there will be a devaluation after October 26.
“In colloquial terms, few would want to ‘get in front’ with the Treasury of the country that owns the dollar printing machine. However, It is difficult to imagine that Washington’s assistance has as its main objective to delay the exchange rate. It is worth remembering that the International Monetary Fund asked the country to purchase reserves, which suggests that the current level of the exchange rate could be transitory,” explained the analyst and financial advisor. Mariano Monferini.
“In that sense, it would not be strange if in the months after the elections we see some adjustment of the official exchange rate. For investors, dollarizing at today’s prices ($1,400, approximately) could be a reasonable strategy if hedging is sought,” he added.
Source: Ambito
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