Argentina's Peso Rebounds, Inflation Drops Sharply

Argentina's peso has rebounded over 5% and stabilized after the government lifted long-standing currency controls and adopted a wider trading band, defying initial fears of sharp devaluation and inflation. The recovery has been supported by a front-loaded $20 billion IMF deal, strong grain export inflows, and President Javier Milei's commitment to fiscal austerity and a fiscal surplus. Inflation has dropped significantly, from nearly 300% to 56% year-on-year, and analysts expect only a modest rise in monthly inflation. Markets have responded positively, with tightening debt spreads boosting Milei's economic agenda, though subsidy cuts have triggered domestic discontent. The government remains well-positioned to manage its debt without urgent new borrowing. In contrast, Mexico's peso has also rallied due to improved global risk sentiment and US-China trade de-escalation, despite economic stagnation.