Argentina taps market to rebuild reserves after agro dollar windfall

Argentine markets rallied at the end of a volatile week, buoyed by a multi-billion dollar influx from agricultural exporters and strong support from the US Treasury.

- 

A temporary tax break spurred the farm sector to commit to selling $7 billion in exports. Separately, US Treasury Secretary Scott Bessent announced negotiations for a $20 billion currency swap and pledged broad support for the country.

Argentina's Treasury is taking advantage of the inflow to purchase dollars - a move viewed by the market as a soft currency intervention.

Economy Minister Luis Caputo said the Treasury had purchased a total of $1.745 billion over two days.

The wholesale peso staged a comeback on Friday to trade at 1,330 to the dollar, reversing a sharp decline from the start of the week when it hit a record low of 1,476 and neared the limit set by the central bank.

"The Treasury has already begun rebuilding reserves," said Federico Filippini, an analyst at Adcap Grupo Financiero. "What's more, the decisive support from the United States has stabilized conditions."

The wholesale peso appreciated nearly 118 in the week after slipping some 1.3% the week before, while the S&P Merval stock index closed with a 6.4% weekly gain to rebound from a 4.38 loss last week.

In contrast, government bond prices fell 1.5% on average as investors cashed in on recent gains.

Agricultural exporters have until Monday to liquidate 90% of what they've declared.