Wall Street at the Treasury Palace: the “Carry Trade” as a final act

This article examines the Argentine economic experiment headed by professional traders occupying key positions in the Ministry of Economy and BCRA. Through the analysis of instruments such as LECAPS, BANCAP and REPO operations, the logic of the “Carry Trade” is studied as an economic policy tactic and its impact on local and international banking. A clear question is raised: this week the banks should have decided to take profits and preserve capital? Now it is late, given a possible financial dislocation, they are played.

In current Argentina, juggers no longer act in the circus: they operate from the Ministry of Economy, the BCRA and the City. But instead of balls, dollar price, rates and expectations. For the first time in recent history, economic policy is in the hands of professional traders trained in Wall Street, experts in short -term arbitrations, but oblivious to the macroeconomic long term of a country.

Since its landing, the “Caputo model” has replaced any development strategy with a high -precision financial show, where fees, futures and bopreal instruments constitute the new decoration. Banks – local and international – until now, have been beneficiaries: their balance sheets exhibit accrued profits translated into dollars that, however, have not yet been perceived. The profitability trick works while the public (the market) does not look behind the curtain: very short term debt, price repression, exchange delay and a monetary base absorbed by mechanisms as fragile and provisional.

But what happens when the final act is approaching? What happens when jugglers lose the rhythm and a ball – the dollar, inflation, debt, or social patience – falls to the ground? The dilemma became urgent: continue to bet on short -term performance or leave on time, renouncing a last gain portion to avoid a catastrophic loss?

The Milei-Caputo experiment: debt as an economic policy

The Argentine government has deployed a speculative manual financial policy. The Treasury and the BCRA have sustained a financing scheme based on very short -term instruments: LECAPS, BONCAP, passive passes and open market operations with rates that exceed 3.3% monthly effective (paid more than double June inflation). The signal to the market is clear; It seeks to contain monetary expansion not by fiscal discipline, but by financial absorption at any cost (scope, 2025).

Meanwhile, the futures market and the implementation of instruments in pesos at unbeatable rates draw an artificially attractive scenario. It is not about structural trust, but about a choreography to sustain the illusion of stability.

Banking in front of the Avaricia dilemma

Banks have accrued extraordinary accounting profits measured in dollars. But as the economic-financial analysis points out, accrual is not the same as perceiving. The realization of these profits depends on the stability of the exchange rate, on the role of regulators, on the physical health of the actors and the possibility of disarming positions without altering market dynamics.

According to Reschini (2025), the current “Carry Trade” is only recommended for aggressive profiles. The differential between rate in pesos and devaluation expectation has been reduced. Even with the controlled dollar, the structural pressure – Mentor Liquidation of the Agro, low future foreign exchange supply, artificially contained gap – presses on the sustainability of arbitration.

The historical precedent: Crisis by messy exit

As Reinhart and Rogoff (2009), Episodes of financial crisis do not usually be due to capital entry, but to their untimely exit. The current architecture reminds other experiences of financial “success” sustained by short -term debt: Russia 1998, Argentina 2001 and 2018, Türkiye 2018. The common denominator; The loss of sudden confidence, which converts profits into irreversible losses.

Stiglitz (2002) warns that markets do not correct information asymmetries, and that agents make decisions based on fake sustainability signals. In this case, banks should ask whether the current rate compensates for real risk or if they are trapped in an illusion of control generated from the Treasury Palace.

Between greed and sanity

In the halls of Argentine economic power, a stabilization plan is not discussed: a survival tactic is executed that maximizes the short term without internalizing its externalities. Banks, funds and traders -locals and foreigners- They have been seduced by monthly effective rates of up to 3.3%, controlled exchange rates and a “financial market for opportunities” that, until now, seems to be made to measure. But that architecture is supported, as Stiglitz (2002) warned, about information asymmetries and a blind faith in which the hand that moves the threads knows what it does.

However, the history of “Carry Trades” In emerging economies it shows that The most risky moment is not the entrance, but the exit. When the rate differential no longer compensates for devaluation or political risk, The exit door can become narrow. At that moment, the difference between a prudent banker and a Avaro can translate into billions of dollars.

Did the financial actors face a “CEPO TO WEIGHT”? We don’t know. If nobody obliges them to the bankersthis week was again a classic but inevitable dilemma: to maximize immediate returns or preserve capital against an abrupt turn of the economic regime? The outcome will depend less on Excel than on the political reading of the moment or a black swan. The biggest challenge of an betting is not trying to win a little more, but to know when you have to stop playing.

Director of Esperanza Foundation. Postgraduate professor at UBA and private universities. Master in International Economic Policy, Doctor of Political Science, author of six books.