BCRA Slows FX Purchases as the Peso Weakens

ON TUESDAY, THE LOCAL MARKET CLOSED ON A MARKEDLY NEGATIVE NOTE, dragged down by an adverse global backdrop. Virtually all assets fell: equities, USD-denominated sovereign bonds, Lecaps, CER instruments, and Dual bonds. The only exception were dollar-linked instruments, which advanced in line with the official exchange rate and financial dollar rates, as did futures, where open interest surged significantly. The BCRA purchased just USD 20 M in the foreign exchange market, on a day when the agricultural sector settled over USD 180 M. Separately, INDEC confirmed that the economy grew in Q1 2026 and that wages outpaced inflation in April.

DOLLAR-DENOMINATED DEBT POSTED DECLINES OF 0.2% in a negative global session, underperforming emerging market debt. Country risk rose to 433 bps from 421 bps. Bopreals, on the other hand, edged slightly higher.

ARS-DENOMINATED DEBT CLOSED BROADLY LOWER, with dollar-linked instruments falling 0.9% as the exchange rate came under pressure. Dual bonds declined 1.8%, while CER instruments and Lecaps fell between 2.0% and 2.1%.

THE OFFICIAL EXCHANGE RATE ROSE 0.9%, settling at ARS 1,469.91 and accumulating a 4.2% gain month-to-date. Financial exchange rates also advanced, with the MEP up 1.7% and the financial dollar up 1.8%, closing at ARS 1,510.6 and ARS 1,550.7, respectively, while the spread widened to 2.7%. In this context, the BCRA slowed its pace of FX purchases, acquiring just USD 20 M on the day — accumulating another USD 50 M — for monthly purchases totaling USD 1,176 M and year-to-date purchases reaching USD 10,932 M. Gross reserves fell USD 38 M, closing at USD 47,469 M.

THE MERVAL FELL 1.0% IN LOCAL CURRENCY AND 3.1% IN USD TERMS, closing at USD 2,093, amid a broad-based sell-off driven by global headwinds. Utilities, financials, and communications were the hardest-hit sectors, while materials was the only one to post gains. Among individual stocks, Edenor (-5.1%), Telecom (-4.7%), and Galicia (-4.6%) led the declines, while Loma Negra (+1.6%), Ternium (+0.8%), and Aluar (+0.5%) were the only names to close higher. A similar trend was seen in New York-listed shares: Edenor (-4.4%), Galicia (-3.7%), and TGS (-3.4%) led the losses, while only Loma Negra (+2.4%) and AdecoAgro (+2.4%) closed in the green.

IN APRIL 2026, THE TOTAL WAGE INDEX ROSE 3.7% M/M, above the 2.6% CPI reading for the same month, implying a real gain of 1.1%. By sector, registered private wages rose 4.0% m/m (+1.4% real), while public sector wages increased 2.3% m/m, declining 0.3% in real terms. Within the public sector, the provincial subsector advanced 2.5% m/m and the national subsector rose 1.6% m/m. On a year-over-year basis, the total index posted 36.9% y/y, above the 32.4% y/y CPI; however, this gap is largely explained by the informal sector (+69.6% y/y). Formal sectors remain lagging: registered private +29.3% y/y and public +29.6% y/y, both below twelve-month inflation. Year-to-date in 2026, registered private wages are up 10.1% and the public sector up 12.0%, against a cumulative CPI of approximately 12.2% over the same period. The April print marks the first sign of purchasing power recovery for formal private employees this year, with an incipient positive impact on consumption.

IN Q1 2026, GDP GREW 0.7% Q/Q AND 2.3% Y/Y, extending the deceleration from the 6.1% y/y pace recorded in Q1 2025. On the demand side, exports (+9.8% y/y) and private consumption (+2.7% y/y) were the main growth drivers, while public consumption fell 0.9% y/y. The weak spot was investment: gross fixed capital formation declined 11.6% y/y — with machinery and equipment down 18.1% y/y and transport equipment off 19.6% y/y — marking two consecutive quarters of contraction. On the supply side, agriculture (+18.1% y/y), mining and quarrying (+12.3% y/y), and financial intermediation (+7.5% y/y) led growth, while manufacturing (-1.7% y/y) and public administration (-1.4% y/y) were a drag.