Argentina’s financial markets extended their losing streak on Friday as country risk climbed to 451 basis points, the highest level since June, while the rest of Latin America rallied on expectations of lower US interest rates following weak American jobs data.
The benchmark Merval index fell 0.45 percent to 3,086,784 points, marking its sixth consecutive session of declines. The selloff has wiped out nearly 6 percent of the index’s value in peso terms so far in August, while New York-listed Argentine American depositary receipts lost as much as 5.6 percent in dollar terms.
The decoupling from regional markets was stark. Brazilian, Chilean, and Peruvian equities all advanced on Friday, buoyed by the weaker-than-expected US labor report that boosted expectations for Federal Reserve rate cuts. Mexico’s peso hit a five-month high against the dollar. But Argentina traded in the opposite direction, reflecting growing investor unease about the country’s fiscal outlook and reserves position.
Country risk, a measure of the spread between Argentine sovereign bonds and US Treasuries, rose 3 percent on the day alone. The metric had been trending lower for much of the first half of 2026 as confidence grew in President Javier Milei’s fiscal consolidation program, but recent weeks have seen a reversal as doubts emerge about the sustainability of the government’s approach.
Analysts pointed to several factors behind the selloff, including persistently low central bank reserves, uncertainty about the timing of a broader currency band adjustment, and the upcoming July inflation data from the national statistics agency INDEC due on August 13. Consensus estimates point to roughly 2 percent monthly inflation, which would feed directly into rent indexation, pension adjustments, and inflation-linked loan balances.
The Argentine peso held relatively steady at 1,499 per dollar in official markets, but the parallel “blue chip” swap rate continued to show a wider gap, reflecting underlying pressure on the currency. Investors are increasingly focused on whether the government can maintain its fiscal surplus amid slowing economic growth.
Argentina’s economy grew approximately 3 percent in the first half of 2026, a pace described by economists as fading from the initial rebound that followed the deep recession of 2024. Domestic demand has weakened in recent quarters, and corporate insolvencies have risen, particularly in foreign-exchange-exposed sectors such as agrifood and energy.
The divergence between Argentina and its regional peers underscores the unique pressures facing Milei’s government, which must balance orthodox fiscal discipline against social demands in a country where inflation, while sharply down from 2024 peaks above 200 percent, remains the highest in the G20 at an estimated 17 to 18 percent annualized.
Sources: Rio Times, Rio Times Markets, Reuters
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