Argentine Markets Rebound Amid Cryptocurrency Collapse Tied to President Milei

Argentina’s financial markets showed mixed performance on Tuesday following a cryptocurrency controversy involving President Javier Milei.

Local stocks managed to recover from steep early losses on Wall Street, while the country’s risk index rose sharply to nearly 700 basis points. The turmoil began after Milei promoted the cryptocurrency $LIBRA on his social media, leading to significant losses for many investors.

Early in the trading day, Argentine stocks listed on the New York Stock Exchange (ADRs) fell by as much as 6% in dollar terms. However, by the close of trading, losses had moderated, and some stocks even posted gains.

Steel producer Ternium and airport operator Corporación América led the recovery among ADRs, with gains of 3.6% and 3.5%, respectively. In contrast, agricultural company Cresud saw its shares drop by 3.45%.

Meanwhile, Argentina’s main stock index, the Merval, rebounded strongly, closing up 6.1% after a sharp 5.7% decline the previous day. Despite these recoveries in equities, Argentina’s risk index, calculated by J.P. Morgan, climbed to 696 basis points—an increase of 21 points from Monday.

Government bonds also faced pressure, with average declines of up to 2% in Wall Street trading. The controversy surrounding $LIBRA has drawn widespread attention and criticism.

Economy Minister Luis Caputo Reaffirms Fiscal Discipline

Economy Minister Luis Caputo downplayed its broader market impact and reaffirmed the government’s commitment to fiscal discipline. “When solid economic fundamentals remain unchanged, temporary noise is often seen as an opportunity by seasoned investors,” Caputo stated on X (formerly Twitter).

He assured that the government would not deviate from its economic strategy. Caputo also emphasized that the incident does not alter Argentina’s fiscal policies.

“This controversy does not change our economic policy, which remains focused on fiscal discipline,” he said on Monday.

The episode highlights the volatility of Argentina’s markets and underscores the risks tied to political controversies spilling over into financial sectors. While some investors view such moments as opportunities, others remain cautious about potential long-term impacts on market stability.