Argentina Markets Close Worst August Since February as Merval Sinks and Country Risk Jumps

ARGENTINA · MARKETS

Argentina closed August with its worst monthly market balance since February: stocks and sovereign bonds sank, country risk jumped nearly a fifth, and only the peso held still. September opened with the wholesale dollar above 1,500 per US dollar and investors asking whether the calm in the exchange market can survive the storm in everything else.

A month to forget in the City

The Merval’s 7.8 percent slide in pesos — 9 percent measured in dollars, closing the month at 1,900.85 units in hard-currency terms — broke a July streak of gains and capped what traders called the worst month since February. Financial stocks led the rout: Banco Francés lost 18.6 percent locally and 19.1 percent in its New York ADR, Banco Macro fell 12.4 and 14.3 percent, and Grupo Financiero Galicia 11.3 and 12.9 percent. The trigger was domestic, not global: second-quarter earnings season confirmed new records in loan delinquency. “The focus of investors is on portfolio quality, not on the profitability of the snapshot,” Pablo Lazzati of Insider Finance told Infobae.

The exceptions clustered in agriculture and energy. Satellogic gained 36 percent in the month, Bioceres 19.4 percent and Adecoagro 14.1 percent, while Metrogas added 10.7 percent and Transener 6.2 percent. The final session told the month’s story in reverse: with Brent jumping 2.7 percent after the first direct US-Iran exchange of fire in a month, the oil-heavy Merval rebounded 1.8 percent on Monday to 3,033,848 points — a reminder of how much of the index now trades as an energy proxy, as The Rio Times tracked in Monday’s market coverage.

Bonds meet the global sell-off — and the 2027 trade

Sovereign debt absorbed a double hit. Locally, the AL35D fell 4.6 percent, the AE38D 4.8 percent and the AL41D 5.7 percent; Cohen calculates hard-dollar debt down 3.1 percent for the month, with country risk up 82 basis points from the July close. Externally, the US 30-year Treasury yield ended August near 5.3 percent, its highest in almost two decades, after Washington doubled its long-bond buyback program in a failed attempt to cap rates. “That made financing more expensive for the whole emerging world and hit Argentine country risk head-on,” Lazzati told Ámbito, noting the index peaked at 535 basis points before settling at 512.

His second warning is political: the “electoral trade” toward Argentina’s 2027 vote is already surfacing in prices, far earlier than many expected — a reason traders give for expecting further corrections before year-end. Wall Street, by contrast, broke a two-month losing streak in August, with the S&P 500 up 2.5 percent, the Nasdaq 3.5 percent and the Dow 1.4 percent on strong corporate earnings.

The peso’s uncanny calm

The striking counterpoint to the asset rout was the exchange market. The wholesale dollar advanced just 1.6 percent in August, to 1,508.50 per US dollar; the official retail rate finished at 1,530 per US dollar, up 1.3 percent, and the card dollar at 1,989 per US dollar. Financial rates moved in lockstep — the MEP at 1,535.52 and the CCL at 1,596.05 per US dollar — leaving the gap between official and parallel rates at just 0.4 percent for the MEP and 4.3 percent for the CCL, levels unthinkable two years ago. The informal blue dollar even ended the month five pesos per US dollar lower, at 1,555.

The central bank managed the calm in two phases: a hard peso-liquidity squeeze in the first half of August, then injections toward month-end that left repo rates at 25 percent overnight, 24 percent at seven days and 23 percent at 14. ROFEX futures settled August at 1,509 per US dollar and priced September at 1,536.50 and October at 1,562.50 — a market that expects drift, not devaluation. Reserve data delivered the one jolt: gross reserves fell US$1.534 billion on Monday to US$48.257 billion, a move the BCRA attributed to month-end technical adjustments in bank portfolios.

September opens above 1,500

The new month begins with the wholesale rate consolidating above 1,500 per US dollar — it opened Tuesday near 1,509 and traded up to around 1,512 — and with a watchlist that runs from prices to politics. Private estimates put August inflation near 1.5 percent, a new floor for the Milei era, with the official INDEC print due mid-month. Beyond that sit the IMF’s fall review, the Senate battle over the central bank charter reform passed by the lower house last week, and the slow build of the 2027 electoral trade that already moved August’s prices.

Why it matters for Latin America

Argentina remains the region’s stress test for disinflation without devaluation. August showed the model’s two faces: an exchange rate stable enough to keep inflation falling, and asset prices fragile enough to reprice 20 percent of country risk in four weeks. With global long rates at two-decade highs, every emerging market in the hemisphere refinances into the same tide — Argentina simply feels it first.

Frequently asked questions

Sources: Rava Bursátil panels via Diario Río Negro and Infobae; Ámbito Financiero; Cohen Perspectivas; BAE Negocios; Datosmacro; JP Morgan; BCRA; Insider Finance; IMB Capital Quants; IOL invertironline.

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