Key Points
— The Argentine peso was the best-performing emerging market currency in March, appreciating 2.3% while the median EM currency depreciated 4% against the dollar
— Local-currency rates compressed 241 basis points in Argentina versus a median increase of 50bp across 24 emerging markets — making it the top carry trade globally during the Iran conflict
— Only Colombia and Israel also saw currency appreciation in the period, while Brazil, Mexico, Chile, and South Africa all posted significant losses
The Argentina carry trade delivered the best returns in emerging markets during March, even as the Iran war triggered a broad risk-off rotation across the asset class. According to a Facimex Valores analysis of 24 emerging economies between February 27 and March 27, the Argentine peso appreciated 2.3% while local-currency bond yields compressed by 241 basis points.
That combination — a strengthening currency and falling rates — is the opposite of what happened in virtually every other emerging market. The median EM currency depreciated 4% against the dollar, and the median local-currency rate rose 50 basis points. Argentina moved in precisely the other direction.
The Full EM Scorecard
The scale of Argentina‘s outperformance becomes clear when set against the full dataset. Using JP Morgan’s GBI-EM index for local-currency rates, Facimex tracked both exchange rate and yield movements across the sample. The results show a near-universal pattern of currency weakness and rate increases — with Argentina, Colombia, and partially Israel as the only exceptions.
| Country | Rate Δ (bp) | FX vs USD |
|---|---|---|
| Argentina | -241 | -2.3% |
| Colombia | -35 | -2.3% |
| Israel | +27 | -0.4% |
| China | +1 | +0.7% |
| Philippines | 0 | +5.0% |
| Malaysia | +6 | +3.0% |
| India | +26 | +4.2% |
| Nigeria | +32 | +1.6% |
| Korea | +41 | +4.9% |
| Peru | +45 | +4.0% |
| Chile | +47 | +5.8% |
| Mexico | +48 | +5.2% |
| Uruguay | +50 | +5.5% |
| Thailand | +53 | +5.3% |
| Czech Rep. | +59 | +3.8% |
| Indonesia | +61 | +1.2% |
| Egypt | +65 | +9.0% |
| Romania | +86 | +2.7% |
| Brazil | +90 | +2.2% |
| Poland | +90 | +4.1% |
| Hungary | +91 | +6.1% |
| Dom. Rep. | +93 | +0.2% |
| South Africa | +94 | +7.5% |
| Turkey | +460 | +1.2% |
Data: Facimex Valores / JP Morgan GBI-EM, Feb 27 – Mar 27, 2026. FX: positive = depreciation vs USD; Rate Δ: positive = yields rose.
Why Argentina Diverged
The divergence reflects the specific dynamics of Milei’s stabilization program. Argentina entered the Iran crisis with extremely high nominal rates that were already on a downward trajectory as inflation decelerated. The carry trade — borrowing dollars to hold peso-denominated assets — remained attractive because the rate compression was a function of disinflation, not risk mispricing.
The same week this data was published, INDEC reported that poverty fell to 28.2% — the lowest since 2018 — and the IRGC terrorist designation reinforced Milei’s strategic alignment with Washington. Both signals bolster investor confidence in regime continuity, which is the foundation of any carry trade.
The LATAM Context
Within Latin America, the median currency depreciated 4.6% and local rates rose 48 basis points during March. Chile’s peso weakened 5.8%, Mexico’s lost 5.2%, and Uruguay — typically a safe haven — saw a 5.5% decline. Brazil’s real depreciated 2.2% while rates rose 90 basis points.
Colombia’s inclusion as the other EM outlier is notable given the institutional turmoil unfolding in Bogotá. The peso appreciated 2.3% and rates compressed 35 basis points — a performance that may not survive the Finance Minister’s walkout from the central bank this week.
For EM investors, the data confirms what the market has been pricing: Argentina’s macro trajectory is sufficiently differentiated from the rest of the emerging complex to withstand a global shock that weakened nearly every other currency in the sample. Whether that resilience holds through a prolonged conflict — and through Argentina’s own election cycle — is the open question.