The market is still not showing a clear trend after Congress approved Argentine President Javier Milei’s executive order allowing the administration to seal a new deal with the International Monetary Fund (IMF). While initial reactions hinted at a newfound optimism, recent movements indicate wariness as details of the upcoming program with the lender remain unknown.

Following days of exchange surges, the informal “blue” dollar rate fell slightly by 1.1% on Thursday, while the financial blue-chip swap rate had a 0.6% drop. The MEP rate increased by 0.1%.

“Tension over the exchange rate is gradually easing, and there is a downward correction of prices in the futures market, which is seeing a more optimistic scenario,” Gustavo Quintana, an analyst and broker for PR Corredores de Cambio, told the Herald. 

However, the Central Bank sold U.S. dollars for a fifth consecutive business day — on Thursday, it lost US$77 million. Total sales have been over a billion dollars since last Friday.

“The Central Bank had to sell foreign currency again to meet the shortage of supply, which I presume will be regularized in the coming days,” Quintana added, saying that there are still questions regarding the deal. According to presidential spokesman Manuel Adorni, the government and the IMF will finalize the agreement “before May.”

Gross international reserves are US$26.7 billion, the lowest since August 2024. Net international reserves are negative US$10.6 billion, close to the level Milei received from the previous administration. The president hopes to use the deal’s fresh funds to lift the country’s capital and exchange rate controls, commonly known as cepo.

While Finance Secretary Pablo Quirno said on Tuesday that the deal would be a 10-year Extended Fund Facility, the decree the Lower House approved on Wednesday does not contain further details. Several analysts told the Herald that this creates uncertainty in the market, especially since the country’s new monetary scheme has not been revealed.

Several market sources told the Herald that the consensus opinion is that the government would devalue its currency and abandon the 1% monthly devaluations in favor of a “more flexible” currency band scheme, where the Central Bank is allowed to act to keep the exchange rate within a range of values. The sources added that the administration is set to eliminate the “blend dollar,” a policy allowing exporters to liquidate 20% of their sales in the financial market. Created by the government to keep the financial exchange rates at bay, the IMF considers it hinders international reserve accumulation. 

Tuesday saw a peak in market uncertainty, as Argentina’s EMBI index, which measures the possibility of a country defaulting on its debt, jumped from 737 to 784 basis points. The index, known as “country risk,” fell on Wednesday to a current value of 762 points.

“The market reaction after Congress approved the decree was moderate, with sovereign bonds in dollars registering slight gains in the morning,” María Belén San Martino, an economist at the Balanz brokerage firm, told the Herald. Global “GD” bonds issued under New York law advanced between 0.6% and 0.8%, with GD29 (+0.6%), GD30 (+0.6%), and GD35 (+0.7%) standing out.

“At the end of the day, however, some bonds showed small declines,” said San Martino.

Soon after the decree was passed on Wednesday evening, Argentine companies on Wall Street, which trade through American Depositary Receipts (ADRs), saw surges of up to almost 9%. Argentine concrete and cement manufacturer Loma Negra’s shares in the U.S. increased by 8.6%, while Transportadora Gas el Sur the BBVA bank had a 6.4% surge.

However, the rally ended on Thursday, after the Macro and the Galicia banks, as well as Loma Negra, saw drops of 3.9%, 2.8%, and 2.7%, respectively.

“The market continues to wait eagerly for the progress of the negotiations with the IMF and the definitions of the agreement, which will provide certainty regarding the exchange rate scheme and a possible loosening of capital controls,” San Martino told the Herald.