The national government reportedly sold US$500 million to curb the dollar

In the week leading up to the Buenos Aires elections, thenational government intensified its intervention strategy in the foreign exchange market to contain the rise of the dollar . According to private estimates, the Treasury sold nearly US$500 million between Tuesday and Friday in an attempt to demonstrate stability in the days leading up to the elections.

However, the move sent a strong signal of weakness. The country risk index again surpassed 900 points, raising alarm bells about the sustainability of the economic strategy, according to NA .

According to the newspaper La Nación , more than half of those currencies—about US$280 million—were placed in the last trading session before the elections, in a market where US$566.5 million were traded. Thus, the Treasury ended up providing practically half of the bills, while the Central Bank intensified its presence in the futures market to try to signal control.

The wholesale dollar, which had started the week at $1,380 after an initial jump, closed Friday at $1,355, down $7.50 compared to the previous day. Economist Salvador Vitelli of the Romano Group noted that "since Tuesday, it could be said that the crawling peg has returned," referring to the managed devaluation reminiscent of past periods of Argentine exchange rate policy.

However, the apparent calm in the exchange rate came at a high cost: the government spent around 30% of the US$1.669 billion in liquidity the Treasury had before these interventions.

The flip side of this gamble was the negative reaction from investors. The dollars used were originally intended to strengthen reserves and cover future debt payments. The result was immediate: country risk climbed above 900 points, after closing August at 829.

Analyst Leonardo Chialva of Delphos Investment explained that Argentina has once again been among the worst-performing emerging market countries. "Today, our bonds yield far above those of countries like Angola, Pakistan, and Ecuador. While they have yields between 9% and 12%, Argentina pays 14% or more," he emphasized.

For several economists, the official offensive served a single purpose: to reach the elections without a sharp jump in the dollar. The ruling party transformed the province of Buenos Aires into a national electoral test, and the market interpreted the strategy as a high-risk move.

"A favorable result could give the government some breathing space; but if the defeat is resounding, the transition to October will be very complicated. In that case, exchange rate pressure would return even more strongly and force the government to sell even more reserves," warned the consulting firm Outlier.