All peso-dollar exchange rates bounced back up on Tuesday after plummeting on Monday, when markets reacted positively to Javier Milei’s party’s landslide win in the midterms.
The wholesale exchange rate ended at AR$1,470, a 2.4% increase from the previous day. That places it 25 pesos below the upper end of the currency band, AR$1,494.53, the threshold for Central Bank intervention. During the day, it peaked at over AR$1,480.
The MEP and blue-chip swap financial rates increased by 2.6% and 2.7% respectively, to AR$1,478.4 and AR$1,495.4. The blue or informal dollar edged up by 0.3% to AR$1,470.
At Banco Nación, the country’s largest bank, the dollar was traded at AR$1,495, surpassing AR$1,500 during the day.
One banking source told the Herald that individuals saving in dollars were buying large volumes. A statement by the Galicia Bank’s Inviu electronic investment platform said speculation that Argentina’s Treasury was buying dollars could have contributed to the “unexpected rise.”
During the weeks ahead of the election, the peso selloff was so worrying that the US Treasury intervened directly in the foreign exchange market, after the Donald Trump administration announced a bailout for Argentina.
On Monday, Trump said that Milei’s election “made a lot of money for the United States,” which analysts interpreted as a sign the US Treasury could sell the pesos it bought.
Ariel Sbdar, CEO of Cocos Capital e-wallet and investment platform, said that the spike in dollar demand was caused by the D31O5 bond, which matures on October 31. Economist Hernán Letcher said in a post on X that the Central Bank used that bond “heavily” to contain the run on the peso, “selling nearly AR$1.7 trillion below the official dollar value at the time.”
According to Lechter, the government intended for investors to buy the dollar-linked bond to cover for a potential post-electoral devaluation, taking pressure off the foreign exchange and futures markets. With the maturity of that bond just around the corner, investors repurchased the October futures and US dollars, causing Tuesday’s spike and, according to Lechter, “a record trading volume of AR$3.06 billion in dollar futures.”
Gustavo Quintana, an analyst and broker for PR Corredores, said that there is usually more demand for coverage in the final days of the month, while participants close their positions, factors which impact the price. “I think yesterday’s initial drop was exaggerated,” Quintana told the Herald.
“We have to wait a few days to see where the exchange rate settles.”
