Central Bank Hits Nine-Year Reserve High as Stock Market Plunges

The week closing this Monday delivers a contradiction that captures Argentina's economic moment with surgical precision: the Central Bank briefly touched USD 50 billion in gross reserves —the highest level since September 2019— while the S&P Merval completed its sixth consecutive losing session, Argentine assets on Wall Street fell as much as 10% on the week, and country risk climbed to 451 basis points, a high since June 10. It is the portrait of an economy accumulating hard currency at record speed but failing to convert that strength into market confidence or into a recovery of the domestic productive fabric.

The Merval in dollars broke below the USD 2,000 floor and retreated to levels last seen on May 22, a signal that the optimism surrounding the lifting of capital controls in April 2025 continues to fade. Among the most affected ADRs of the week were Bioceres, Corporación América Airports, and Loma Negra, the latter down 3.9% in New York precisely during the week in which its new controlling shareholder, Marcelo Mindlin, rang the opening bell at the NYSE to celebrate the cement maker's centennial. The wholesale dollar closed Friday at $1,498.50, at the edge of the $1,500 resistance the government defends through indirect intervention via dollar futures contracts and dollar-linked securities. In the informal market, the blue dollar retreated to $1,525, its lowest since July 16, while the contado con liquidación settled at $1,593.

External turbulence explains part of the deterioration. The conflict in the Persian Gulf keeps the Strait of Hormuz as the epicenter of global uncertainty: Iran announced an agreement with Oman that would imply restrictions on the passage of US and Israeli vessels, driving oil up more than 4% on the week and pushing US Treasury yields higher, weighing on Argentine sovereign bonds with average declines of 0.9%. Goldman Sachs, meanwhile, projects further upside for gold in the second half of the year, a data point of direct relevance to Argentina: the metal accounted for 61% of mining exports in the first half, which totaled USD 39.875 billion with a 49% year-on-year jump. On Friday, gold climbed 2.44% to USD 4,350 per ounce, accumulating a 27.8% rise so far in 2026.

But the pressure on assets also has domestic roots. July inflation in the City of Buenos Aires reached 2.9%, a jump of more than a percentage point from June's 1.8%, driven by tourism services during the winter break —lodging rose 29.1%, tourist packages 26%, and airfares 21.7%. Economist Hernán Lacunza estimated that the Buenos Aires figure is consistent with national inflation of around 2.2%, versus 1.9% in June. The market has already absorbed the acceleration: the BCRA's Market Expectations Survey projected 2% for July before the CABA data was released, and now the definitive gauge will come this Thursday the 13th when Indec publishes the national CPI. The presidential promise to bring monthly inflation to a figure starting with zero before the end of the term looks increasingly distant: analyst consensus places the annual index for 2026 at around 29.8%.

The week also exposed the internal tensions of the economic program. The research team at Banco Mariva called the Treasury's excessive caution at the last debt auction "counterproductive," raising just $5.4 trillion net despite favorable monetary conditions, generating a liquidity shortage that pushed short-term rates up by some 250 basis points. Consultora 1816 warned that the government faces a dilemma without an easy exit: keeping the dollar below $1,500 requires absorbing pesos, but the market dried up after the auction and the room to do so has shrunk. A new placement of the Bonar 2029 this week will seek to compensate for that scarcity.

The domestic front is no calmer. SME retail sales fell 3.8% year-on-year in July and are down 2.7% in the first seven months of the year, according to CAME. More than half of the companies surveyed by Indec cite "insufficient demand" as their main problem. Private sector credit in pesos fell 1% in real terms in July, its ninth consecutive month of real contraction. Total delinquency on consumer credit —including both the financial and non-financial systems— has quintupled in 18 months, with arrears over three months reaching nearly a third of the portfolio outside the banking system. Fintech expansion is part of that story: the Instituto Tecnológico de Buenos Aires recorded that the segment grew from 3.7 million to more than 8 million users with active credit, now concentrating close to 40% of formal consumer credit, with operating delinquency stabilized around 23%.

The productive economy displays the same dualism that describes almost every public debate in Argentina. Oil production reached 914,900 barrels per day in June, an all-time record and a 17.1% year-on-year advance, driven by Vaca Muerta. YPF sold two conventional blocks in Mendoza for USD 405 million to finance its unconventional expansion. Mining production grew 8.4% in the first half, another record. The trade surplus could reach USD 28 billion in 2026. But manufacturing industry has accumulated a 2.2% decline in the first half and construction has lost more than 62,000 formal jobs since November 2023. The half of the country that does not export energy or minerals feels almost nothing of that boom.

This week the government also opened two long-term institutional debate fronts. The Senate gave initial approval to the law on the inviolability of private property, which restricts the margin of state discretion in expropriations and speeds up eviction proceedings, although the chapter on the Land Law —one of the ruling party's political pillars— was trimmed before the vote, in what El Cronista described as losing "the battle it could not afford to lose" on the cultural plane. At the same time, the reform of the BCRA's Charter is advancing in Congress, which would concentrate the entity's mandate exclusively on the stability of the peso, eliminating the objectives of employment and development. The debate runs deep and divides economists: for some, it is the most important structural anti-inflationary policy in decades; for others, it institutionalizes a bias that compresses growth and real wages. Javier Milei himself, who in 2022 described the peso as "excrement" and called for the elimination of the Central Bank, is now its main institutional promoter, a contradiction that the entity's former president Juan Carlos Fábrega pointed out publicly this week.

What lies ahead is more than a single inflation print. Thursday's CPI will define whether the disinflationary process remains on track or whether the July acceleration marks the beginning of a higher plateau. The new Bonar 2029 auction will show whether the Treasury can rebuild liquidity without saturating the market. And the Central Bank will have to choose between defending the $1,500 floor with increasingly costly tools or allowing an orderly correction that several economists —though not Ricardo Arriazu, one of the most influential voices for the government— judge inevitable. With presidential approval falling to 37% according to Atlas Intel and economist Sergio Berensztein warning that with those numbers Milei would not reach 40% in the 2027 presidential election, the political window for unpopular adjustments narrows as the electoral calendar advances.

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**Mercado Libre (NASDAQ: MELI)** — Shares fell 6% on Wall Street following the second-quarter 2026 earnings release, in which revenues beat consensus but margin compression and rising long-term delinquency —which climbed to 18.7% of the portfolio for terms over 90 days— weighed on the price. The company, with a market capitalization of approximately USD 91.6 billion, remains the largest Argentine-origin equity asset traded internationally.

**Loma Negra (NYSE: LOMA)** — The cement maker celebrated its centennial with the ringing of the bell at the NYSE under the leadership of its new controlling shareholder, Marcelo Mindlin, who projected a sector recovery driven by investments in Vaca Muerta and mining under the RIGI, estimated at USD 150 billion. The stock retreated 3.9% on the week in New York, in a context of generalized decline in Argentine assets.

**YPF (NYSE: YPF)** — The state-owned oil company sold two conventional blocks in Mendoza for USD 405 million —the Chachahuén cluster to Energía Mendocina and Compañía Andina de Petróleo y Gas, and the Mendoza Non-Operated cluster to San Benito Upstream, controlled by the Pérez Companc group— as part of its strategy to divest mature assets and concentrate resources on the unconventional development of Vaca Muerta.