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Carry Trade Heats Up in Argentina as Yields Jump and Dollar Stays Steady

JP Morgan flags Argentina for short‑term carry opportunities under a calmer currency backdrop.

Overview

  • December inflation printed at 2.8%, reinforcing the view of easing price pressures that make peso returns more compelling if the exchange rate holds.
  • The Treasury rolled over about 98% of peso maturities, validating steep short‑term costs that reached a 3.35% effective monthly rate on a 42‑day Lecap.
  • The central bank reportedly bought roughly US$562 million on the MLC in recent sessions and drained pesos via remunerated instruments, helping contain the dollar and keep local liquidity tight.
  • Analysts estimate potential dollar‑equivalent gains near 15% under current conditions, with some citing real returns above 16% on select securities.
  • Advisers stress the approach should be tactical and actively managed given risks from a sudden FX move, policy shifts or price declines in peso assets, with JP Morgan recommending short‑dated carry positioning such as selling three‑month NDFs and overweighting high‑yield Argentine debt on a selective basis.