Country risk rises to highest level in two months

Argentina's country risk index climbed to its highest point in two months, signaling growing investor caution amid international market turbulence and domestic economic concerns.

The index, which measures the spread between US Treasury yields and Argentine debt, reached 463 basis points on Monday. This marks a significant increase from the 402 points seen a month ago, which was the lowest point during Javier Milei's administration. The rise is attributed to a combination of factors, including global market volatility driven by the conflict in the Middle East, rising interest rates, and fears of renewed inflation acceleration.

Despite the upward pressure on the country risk index, Argentine sovereign bonds experienced a decline, falling up to 0.9%. Analysts at Cohen Aliados Financieros noted that after trading above their emerging market peers for months, Argentine bonds corrected, and the market refocused on local fundamentals, with economic activity showing no signs of consolidation.

In contrast to the bond market, the Buenos Aires stock exchange saw a modest increase of 1.1%, closing at 3,122,064 units, equivalent to US$1964 when adjusted for the contado con liquidación dollar. Ternium, Sociedad Comercial del Plata, and YPF were among the top performers in the main panel. Argentine stocks also performed well on the New York Stock Exchange, with YPF, Globant, and Telecom Argentina showing gains.

The official wholesale dollar closed at 1,497.65 pesos, a slight decrease from the previous Friday. The government maintains an artificial ceiling on this rate below 1,500 pesos, although the full band limit stands at 1,856.10 pesos. The official retail exchange rate remained stable at 1,520 pesos.