Argentina's Peso Holds Firm As Markets Test Milei's New Monetary Rules

(MENAFN- The Rio Times) Key Points

• Argentina's new FX regime ties the peso's band to inflation, easing panic in cash markets but highlighting lingering capital-account stress.
  
• Equities rally modestly as policy credibility improves, with financial and high-beta names leading while select laggards struggle.
  
• External markets remain cautious, and sober global conditions temper any euphoric risk appetite.
  

Peso Adjusts as Argentina Shifts FX Policy
Argentina's peso is trading with modest depreciation this morning after the central bank unveiled a revamped foreign-exchange and monetary framework set to start January 1, 2026.

The on-screen spot reference is about 1,449 per dollar, while the informal“blue” market sits near 1,500. Retail official rates are in the high 1,400s, and bond-implied curves point to higher levels in externalization markets.

The relatively narrow gap between official and blue suggests immediate cash stress has eased, even as heavier premiums in bond FX channels signal continued hedging demand and capital-account friction.



The shift away from a fixed 1% monthly crawl to inflation -linked FX bands, combined with a clearer reserve accumulation strategy, reflects a more rules-based approach.

Conservatives and market-friendly voices have welcomed these moves as steps toward sustainable policymaking and greater predictability.

That said, the new regime's reliance on thin market volumes and operational caps on FX purchases means the real test will be execution rather than headlines.

Global conditions have played a supporting role. A softer dollar backdrop and guarded positioning ahead of major central bank meetings have reduced tail risk, giving emerging markets like Argentina room to breathe.



But traders remain vigilant, with futures pointing to gentle peso depreciation into early 2026 rather than disorderly moves.
Equities See Select Gains
Argentina's S&P Merval index closed higher, reinforced by a narrative that improved policy credibility bolsters investor confidence. Banks and high-beta domestic names benefited most.
Top Winners:
1. VALO (up ~3.8%)
2. SUPV (up ~3.4%)
3. GGAL (up ~1.9%)
4. AGRO (ADR up ~6.5%)
5. CEPU (up ~1.9%)
Top Losers:
1. MELI (ADR down ~2.4%)
2. BYMA (down ~1.6%)
3. TGNO4 (down ~1.0%)
4. COME (down ~0.6%)
5. CRES (down ~0.1%)

Local technical indicators suggest the Merval's uptrend remains intact but may consolidate without fresh catalysts. The peso's trajectory likewise looks orderly for now, with traders calibrating between support around the low 1,440s and resistance near the mid-1,400s.

In sum, markets are cautiously embracing reforms that enhance credibility without abandoning realism.

MENAFN17122025007421016031ID1110491392