Peso Firms as Argentine Inflation Cools to 33.2%

Market Snapshot

Asset	Level	Change
MERVAL	3,229,324.00	-0.18%
USD/ARS	1,482.99	-0.58%
EUR/ARS	1,687.98	+2.27%
Gold	4,037.60	-0.58%
Brent Crude	84.68	-0.06%
Soybean	1,196.50	-0.89%
Bitcoin	64,728.87	-0.35%
Argentina 10Y	-	-

Prior Economic Events

Data	Prior	Cons	Actual
No events available

Today's Economic Events

Data	Prior	Cons	Time
No events available

Argentina annual inflation fell to 33.2% YoY as of May 31, the lowest level since August.
MERVAL slipped 0.18% to 3,229,324 while USD/ARS declined 0.58% to 1,482.99.
Soybean prices dropped 0.89% to 1,196.50, pressuring export revenues.

Yesterday's Recap

Markets digested the latest inflation print showing annual CPI at 33.2% YoY through May, confirming three consecutive months of deceleration and supporting President Milei’s disinflation narrative. The MERVAL index closed 0.18% lower at 3,229,324 amid light volumes as investors rotated out of equities into fixed-income assets. USD/ARS eased 0.58% to 1,482.99, narrowing the gap with parallel rates and reducing immediate depreciation pressure on the peso.

EUR/ARS rose 2.27% to 1,687.98, tracking euro strength against the dollar rather than local factors. Gold fell 0.58% to 4,037.60 while Brent crude held near 84.68, leaving limited impact on Argentine energy margins. Soybean futures declined 0.89% to 1,196.50 on improved U.S.

weather, weighing on expected export proceeds and fiscal receipts. Bitcoin slipped 0.35% to 64,728.87 with little spillover to domestic risk assets. The trade surplus and reserve gains noted in recent data further eased devaluation concerns.

The Day Ahead

The BCRA will release its weekly reserve update tomorrow, providing the first post-inflation gauge of foreign-currency purchases. INDEC is scheduled to publish June industrial production and construction figures on July 16, offering insight into real-economy momentum after the CPI slowdown. Treasury plans to auction LETES and dual-currency bonds mid-week, testing demand for peso instruments at current yields.

Markets will monitor soybean export registrations for signs of volume recovery ahead of the July 20 tax deadline. IMF staff are expected to finalize Article IV conclusions by month-end, potentially unlocking the next disbursement tranche. No major political events are flagged through the weekend.

Other Economic Notes

Fiscal consolidation remains on track with the primary surplus target of 0.8% of GDP for 2026 still viewed as achievable following June’s outperformance. Lower inflation has eased pressure on indexed spending, freeing fiscal space for targeted transfers without breaching deficit caps. Export competitiveness continues to hinge on soybean prices and the crawling-peg pace, with any sustained decline in commodity values threatening reserve accumulation.

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Other Economic Notes (continued)

The government’s recent placement of dollar-linked 2027 bonds at improved yields signals renewed access to external markets. Broader confidence hinges on sustained disinflation and timely IMF disbursements to anchor peso stability.

Global Macro News

U.S. consumer prices fell for the first time in six years, prompting markets to trim July Fed hike odds and supporting risk assets globally. New Zealand’s central bank flagged additional rate hikes to counter persistent inflation, tightening global financial conditions for emerging-market borrowers.

South Korea’s central bank is set to raise rates on July 16 for the first time in over three years, reinforcing the higher-for-longer theme across Asia. Greek central bank governor Stournaras highlighted solid growth prospects, contrasting with Argentina’s tighter external financing environment. Philippine and Nigerian currency moves showed mixed dollar demand, illustrating divergent EM responses to softer U.S.

inflation. Global equity gains on the U.S. data provided a mild tailwind for Argentine bonds, though commodity weakness capped upside.

Oil stability near 84.68 limited immediate relief on Argentina’s import bill.

BCRA Watch

The 33.2% YoY inflation reading through May reinforces the BCRA’s decision to maintain the current policy stance, with markets now pricing only modest easing after the October mid-term elections. Officials continue modest FX purchases above the 1,480 level while keeping the crawling peg aligned with the disinflation path. Forward guidance emphasizes that sustained peso strength will be tolerated provided reserve accumulation meets program targets.

Any move above 1,500 would likely prompt verbal intervention rather than an immediate rate adjustment. The committee views the trade surplus and lower inflation as mutually reinforcing, reducing the need for aggressive tightening. External disbursements from the IMF remain the key swing factor for BCRA credibility in the second half of the year.

Argentina Macro Daily(Beta Mode)