Core Viewpoint - The Argentine peso continues to decline, reaching a historic low despite multiple interventions by the U.S. Treasury, driven by investor concerns over the upcoming midterm elections on October 26 [1][3][4]. Group 1: U.S. Intervention and Market Response - The U.S. Treasury has intervened in the market by purchasing approximately $400 million worth of pesos since October 9, although this figure has not been confirmed by either government [4]. - A $20 billion currency swap arrangement was announced between the U.S. and Argentina, with discussions of potentially increasing this to $40 billion [5]. - Despite these measures, confidence in the peso has collapsed, leading to a significant demand for dollars as investors anticipate a sharp devaluation post-election [5][6]. Group 2: Political Uncertainty and Market Dynamics - The market turmoil began after President Milei's party faced setbacks in key local elections, raising concerns about his ability to implement reforms [6]. - Investors are closely watching the upcoming midterm elections, fearing that Milei may not secure enough support for his reform agenda, which has translated into a sell-off of the national currency [6][7]. - The demand for dollars remains strong and is expected to persist until the election results clarify the future of exchange rate policies [7]. Group 3: Foreign Exchange Reserves and Devaluation Expectations - Argentina's central bank is facing dwindling hard currency reserves, with net reserves estimated to be below $5 billion [8]. - The low reserve levels have heightened fears that the Milei government may be forced to abandon the current exchange rate regime, leading to a significant devaluation of the peso [8]. - Offshore market indicators, such as non-deliverable forward (NDF) contracts, suggest that the market is pricing in a rapid depreciation of the peso beyond the official trading range, with predictions that the exchange rate could fall below 1600 pesos per dollar [8].