OK. So, what's the trade for a US investor to take advantage (to speculate on the outcome) for an improving Argentine peso/Argentine economy? Want to own Argentine stocks in peso terms isolated from/hedged against the dollar? Or is that trade gone with the Treasury swap? Call me curious.
https://batimes.com.ar/news/economy/bessents-big-gamble-on-argentina-has-a-narrow-road-to-pay-off.phtml Brad Setser is a Keynesian, and hates Trump. Quoted extensively in this. "Bessent told Fox News Thursday that he thinks the peso is undervalued. Most economists take the opposite view, saying the currency is too strong and hurting Argentina’s competitiveness. You don’t need economic theory to make that argument: the evidence is in plain sight at shopping malls across the border in Chile, where Argentine buyers have been on a spree thanks to the peso’s new purchasing power." (Chile is in worse shape than Argentina because of their govt)
Argentina is going to use the $20 billion to prop up their currency. What happens if the peso crashes and they can't get it back?
Argentina has $490 billion in debt. Of that, half is U.S. dollar denominated. Say about 10% of that is short-term debt. Then they have $24.5 billion in short-term U.S. dollar debt already. The $20 billion nearly doubles that.
Say Milei's party loses in the midterm elections. Say markets don't want to refinance that. Argentina is swimming in very dangerous waters.
It is a wise and shrewd move and will pay dividends down the road. Multiple benefits and those who don't see it probably don't have a good grasp of economics and politics, or have allowed their political biases to supersede their sensibilities.
OK. So, what's the trade for a US investor to take advantage (to speculate on the outcome) for an improving Argentine peso/Argentine economy? Want to own Argentine stocks in peso terms isolated from/hedged against the dollar? Or is that trade gone with the Treasury swap? Call me curious.
Two plays. Buy stocks. Buy the peso and hold it. It should appreciate if the economy grows.
https://batimes.com.ar/news/economy/bessents-big-gamble-on-argentina-has-a-narrow-road-to-pay-off.phtml Brad Setser is a Keynesian, and hates Trump. Quoted extensively in this. "Bessent told Fox News Thursday that he thinks the peso is undervalued. Most economists take the opposite view, saying the currency is too strong and hurting Argentina’s competitiveness. You don’t need economic theory to make that argument: the evidence is in plain sight at shopping malls across the border in Chile, where Argentine buyers have been on a spree thanks to the peso’s new purchasing power." (Chile is in worse shape than Argentina because of their govt)
Yeah--overvalued compared to Chile is not much of a rebuttal as, you point out, Chile is in worse shape. Cheers.
Thanks. That was my take away from your post. I prefer clarity rather than making an assumption. Best.
Argentina is going to use the $20 billion to prop up their currency. What happens if the peso crashes and they can't get it back?
Argentina has $490 billion in debt. Of that, half is U.S. dollar denominated. Say about 10% of that is short-term debt. Then they have $24.5 billion in short-term U.S. dollar debt already. The $20 billion nearly doubles that.
Say Milei's party loses in the midterm elections. Say markets don't want to refinance that. Argentina is swimming in very dangerous waters.
Not really my place to answer your speculations. Cheers.
It is a wise and shrewd move and will pay dividends down the road. Multiple benefits and those who don't see it probably don't have a good grasp of economics and politics, or have allowed their political biases to supersede their sensibilities.
Bravo Jeff! Pay attention, folks. Yeah... I am not a financial dude, but reading through that bill you could just see all the flaws.
You forgot the great dove hunting there!