Argentina’s month-on-month trade balance in April was $2m. The result was below the expected $1,760m.
The data indicate a smaller trade surplus than forecast. No further breakdown was provided in the statement.
We are looking back at the April 2025 trade balance figure, which was a significant shock that shattered market confidence at the time. That massive miss, coming in at only $2 million against expectations of over $1.7 billion, was the catalyst for the peso’s sharp depreciation in mid-2025. It serves as a critical reminder of how quickly sentiment can turn on Argentine assets.
This history directly informs our current cautious stance, as we see worrying echoes from that period. Central Bank foreign reserves have dwindled, reported last week at just $22 billion, a level that offers a very thin cushion against external shocks. This is a significant drop from the relative stability we saw in late 2024, when reserves were holding above $30 billion.
Given the low reserves and the memory of last year’s collapse, we should anticipate heightened currency volatility. Implied volatility on three-month ARS/USD options has already ticked up to 95%, reflecting deep market anxiety about the peso’s stability. Traders should consider buying US dollar call options or Argentine peso put options to hedge against a potential devaluation event in the near term.
Beyond currency, we see risk in sovereign debt markets. Argentina’s 5-year credit default swap (CDS) spreads have widened by 50 basis points this month to 1850 bps, signaling growing concern over the country’s ability to service its debt. Establishing long positions in these CDS contracts offers a direct way to protect portfolios from a sovereign credit event.
The upcoming May 2026 inflation data and the next trade balance report will be pivotal. Any negative surprise in these figures could trigger a sharp market reaction, similar to the one we witnessed after the April 2025 report. We must be positioned for downside risk before those numbers are released.
