currency

The central bank said deal was part of a comprehensive strategy to help it respond to forex and capital markets volatility.

The Central Bank of the Argentinian Republic (BCRA) said it has signed a $20bn exchange rate stabilisation agreement with the United States Treasury Department, six days ahead of a key midterm election.

The central bank’s statement on Monday said the agreement sets forth terms for bilateral currency swap operations between the US and Argentina, but it provided no technical details.

The central bank said: “Such operations will allow the BCRA to expand its set of monetary and exchange rate policy instruments, including the liquidity of its international reserves”.

The Argentinian peso closed at a record low, down 1.7 percent on the day to end at 1,475 per dollar.

The BCRA said the pact was part of a comprehensive strategy to enhance its ability to respond to foreign exchange and capital markets volatility.

The US Treasury did not immediately respond to a request for details on the new swap line and has not issued its own statement about the arrangement.

US Secretary of the Treasury Scott Bessent said last week that the arrangement would be backed by International Monetary Fund Special Drawing Rights held in the Treasury’s Exchange Stabilization Fund that will be converted to dollars.

Bessent has said that the US would not put additional conditions on Argentina beyond President Javier Milei’s government continuing to pursue its fiscal austerity and economic reform programmes to foster more private-sector growth.

He has announced several US purchases of pesos in recent weeks, but has declined to disclose details.

Midterm vote

Argentinian Minister of Economy Luis Caputo said last week that he hoped the swap deal framework would be finalised before the October 26 midterm parliamentary vote, in which Milei’s party will seek to grow its minority presence in the legislature.

Milei, who has sought to solve Argentina’s economic woes through fiscal spending cuts and dramatically shrinking the size of government, has been handed a string of recent political defeats.

US President Donald Trump said last week that the US would not “waste our time” with Argentina if Milei’s party loses in the midterm vote. The comment briefly shocked local markets until Bessent clarified that continued US support depended on “good policies”, not necessarily the vote result.

He added that a positive result for Milei’s party would help block any policy repeal efforts.

WASHINGTON — The U.S. directly purchased Argentine pesos on Thursday and finalized a $20 billion currency swap framework with Argentina’s central bank, Treasury Secretary Scott Bessent said in a social media post.

The intent is to provide assistance from the Latin American country’s economic turmoil.

“U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” Bessent said, adding that the Treasury Department conducted four days of meetings with Argentinian Finance Minister Luis Caputo in Washington to come up with the deal.

Bessent has insisted that the Argentina credit swap is not a bailout. Last month, President Trump stopped short of promising Argentina’s President Javier Milei a financial bailout from the Latin American country’s economic turmoil.

Still, U.S. farmers and Democratic lawmakers have criticized the deal as a bailout of a country that has benefited from sales of soybeans to China, to the detriment of U.S. farmers.

Argentina is one of the biggest Latin American economies and the biggest borrower from the International Monetary Fund — its total outstanding credit as of Aug. 31 is $41.8 billion.

The offer to financially help Argentina comes as Trump has frequently promoted his “America First” agenda. Critics contend that the planned intervention is a way to reward a personal friend of Trump’s who is facing a critical midterm election next month.

Milei celebrated Bessent’s announcement on social media, hailing his economy minister, Luis Caputo, as “far and away, the best Minister of Economy in all of Argentine history…!!!”

Caputo was in Washington last week for talks with Bessent about the swap line.

Argentina’s deregulation minister, Federico Sturzenegger, also congratulated Caputo and the rest of the economic team. “Let’s keep working so that our children want to stay and live in Argentina,” he wrote, adding a pitch to voters to support Milei in the crucial midterm elections later this month.

Hussein writes for the Associated Press. AP writer Isabel DeBre in Buenos Aires contributed to this report.

The money saving guru has settle the debate on what currency you should pay in when you’re overseas – and it appears that many people have been making a costly mistake

Martin Lewis has finally weighed in on the age-old holiday conundrum, revealing whether it’s wiser to pay in pounds or local currency on your credit card abroad. Sharing his expert advice with BBC audiences, he unravelled the mystery, advising on the best payment method to save money while jetting off.

Martin advised: “When you go abroad and you pay on plastic [card] and the overseas cash machine or shop asks you: ‘Do you want to pay in pounds or euros?’ What do you do? Well, the correct answer is you should always pay in euros or whatever the local currency is. That means it’s your plastic that’s doing the exchange rate conversion, not the overseas shop or ATM.”

He emphasised that this holds true globally.

Social media users chimed in with their tips and personal experiences too. One user suggested: “Just get Revolut or Monzo.”

Another declared: “I use Starling Bank it has no fees abroad and recommends paying in the local currency instead of pounds. Something I saw online about dynamic exchange rate and it can cost you more otherwise.”

A third added: “Revolut has always been the best on doing this, can exchange right in the app a swell, and when withdrawing it’ll just take it straight from that, half the time the only fee is the cash fee by the machine you use.”

READ MORE: Martin Lewis urges Brits to remember ‘ASAB’ rule when booking holidays

Meanwhile, a recent traveller shared their experience: “Just back from Spain and not a single ATM did free cash withdrawals either, thankfully that’s all I was charged with my Chase account.”

One savvy traveller remarked: “I just get euros before I go anywhere save all the hassle, and if I’m really stuck for cash go into an actual bank on holiday and withdraw money on my card.”

This tip follows the advice from a money-saving guru who emphasised the urgency to secure travel insurance ‘ASAB’.

While speaking on This Morning, the financial expert shared, “My travel insurance rule is get it ASAB (as soon as you book). People do get a little confused about this, so let’s break it down.”

He went on to instruct: “If you’re getting a single trip policy, so that is a policy to cover just one holiday, then what you do is as soon as you book, you go on one of the travel insurer’s website, you tell it your holiday dates and you buy the policy then.”

Martin Lewis explained that if your holiday is in August and you’ve booked in January, securing your insurance in January is equally important.

“That means you have the travel insurance in place to covers that holiday,” he said, adding: “You don’t need to [cover yourself] for extra dates [in case there’s a delay at the airport] because you have your return date.

“If something delays you, so you weren’t back, that would still be covered because that delay is all part of the travel insurance.”

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The euro breached the $1.17 mark on Thursday, reaching levels last seen in September 2021. This 13% year-to-date surge positions the common currency on course for its strongest annual performance since 2017 — and potentially even since 2003. The rally therefore brings the euro closer to the psychologically significant 1.20 threshold.

Since Donald Trump’s inauguration on 20 January 2025, the euro has appreciated roughly 15% against the dollar. But what are the reasons behind the euro’s recent success, and how much further can it rise?

Fiscal turn in Germany is a game changer

The explanation lies in an unusual convergence of fiscal stimulus in Europe, waning confidence in US monetary policy, and a build-up of speculative dollar short positions that are fuelling the euro’s ascent.

While the European Central Bank (ECB) has extended its rate-cutting cycle, the key shift underpinning the euro’s strength has come from fiscal policy — particularly in Germany.

In March, the Bundestag approved a constitutional amendment exempting military and infrastructure spending from the country’s strict “debt brake” law.

This legal reform paved the way for a €500 billion infrastructure fund, earmarked for green energy, digital transformation, and regional development through 2035 — all structured off-budget to bypass debt constraints.

Simultaneously, Berlin has pledged to increase defence spending to 3.5% of GDP, aligning with NATO’s Readiness 2030 goals and the broader €800 billion ReArm Europe initiative.

US turmoil weighs on dollar sentiment

Across the Atlantic, the US economy has shown signs of softening. First-quarter GDP contracted, driven partly by a front-loading of imports ahead of new tariffs which were set to take effect in April.

However, market attention has focused more sharply on the political pressure mounting against Federal Reserve Chair Jerome Powell.

Despite Powell reiterating this week that rate cuts are premature — citing solid growth and tariff-driven inflation uncertainties — investor confidence in Fed independence has been shaken.

According to BBVA analysts: “Jerome Powell is not leaning toward a rate cut as soon as July, although there is an internal debate at the Fed about the timing of the next rate cut, and it may well continue to grow.”

They added that the dollar’s weakness has deepened “amid reports that US President Donald Trump is considering selecting and announcing a replacement for Fed Chair Jerome Powell by September or October”. This is despite the fact that Powell’s term is set to end in May 2026.

Markets interpret this as a potential “shadow chairman” scenario, where someone behind the scenes could keep interest rates low, thereby putting negative pressure on the dollar.

Euro-dollar outlook: What analysts are watching

Francesco Pesole, analyst at ING, underscored the growing relevance of upcoming US employment data.

“News on the jobs market has significant impact potential now that inflation figures for May have failed to trigger a dovish response by Powell. The rationale could be that if something moves on the second part of the mandate (full employment), a few more FOMC members could join the dovish ranks despite inflation concerns.”

He noted that markets currently price a one-in-four chance of a rate cut on 30 July and 62 basis points of easing by the end of the year.

Meanwhile, investor positioning continues to steer euro-dollar movements.

Matthew Ryan, Head of Market Strategy at Ebury, said: “EUR/USD is almost entirely driven by rising dollar shorts, rather than a more positive outlook for the common bloc’s economy.” In other words, the euro is rising against the dollar because investors are betting against the greenback, rather than placing more faith in the euro.

Technical indicators also point to continued momentum. Luca Cigognini, analyst at Intesa Sanpaolo, commented: “The short-term structure of EUR/USD remains generally bullish. A break above 1.1717, now a resistance level, could push the euro toward 1.1750, raising the next target to 1.1800/1.1820.”

Beyond those levels, traders are eyeing resistance at 1.1910 — the highs of August 2021 — followed by the psychological barrier at 1.20.

Higher targets include 1.2350 (January 2021) and 1.2550 (February 2018), but much will depend on how economic indicators and political developments evolve in the second half of the year.

Published on
23/06/2025 – 15:51 GMT+2

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The dollar rose on Monday as uncertainty over the Israel Iran conflict persisted following US strikes on Iranian nuclear facilities over the weekend.

By around 2.45 CEST, the Dollar Index had risen 0.61% in daily trading to 99.31.

Over the month, it showed a 0.19% increase, although its year-to-date value was still down almost 9%, failing to win back losses linked to erratic policies from the Trump administration.

US President Donald Trump said that the weekend strikes had caused “monumental damage”, although some Iranian officials downplayed the impact. The full extent of the damage could not immediately be determined by the UN’s nuclear watchdog. 

Israel — meanwhile — continued with its strikes on Iran on Monday, while Tehran vowed that it would “never surrender to bullying and oppression”.

Several nations warned Iran against a retaliatory closure of the Strait of Hormuz, a shipping lane responsible for around 20% of global oil and gas flows.

“In this morning’s trading session, the dollar staged an expected rebound. The demonstration of US military strength, as well as the fear of higher oil prices, weakened the euro,” said ING economists in a note.

Higher oil prices would likely drive up inflation and discourage the US Federal Reserve from cutting rates in the near future. This would spell bad news for US consumers but would simultaneously increase the dollar’s attractiveness to investors.

“Looking ahead, one of the key questions is whether US involvement in the conflict could restore the dollar’s safe-haven appeal. Here, a crucial factor will be the duration of any potential Strait of Hormuz blockade. The longer such a blockade lasts, the higher the likelihood that the value of safe-haven alternatives like the euro and yen is eroded, and the dollar can enjoy a decent recovery,” said ING economists.

The greenback’s value has dropped significantly this year as policies from the Trump administration have spooked investors, damaging the currency’s status as a safe-haven asset.

Signals worrying investors are not solely linked to trade policy, but also include a high US deficit, the cost-slashing bureau DOGE, sudden cuts to foreign aid, withdrawals from international treaties, and the prospect of financial deregulation.

Greg Hirt, chief investment officer with Allianz Global Investors, told Euronews that “structural issues around a twin deficit and the Trump administration’s volatile handling of tariffs should continue to weigh on an overvalued US dollar”.

Even so, he noted that the “short term potential for higher oil prices will likely affect the Chinese and European economies to a greater extent, as they are more dependent on oil imports than the US”.

Ryan Sweet, chief US economist at Oxford Economics, reiterated this point, noting that “the US economy is essentially energy independent but others are not, including Japan as it imports most of its oil from the Middle East”.

Sweet told Euronews that dollar gains are positive but still muted as “currency markets are in a wait and see mode”.

There is also significant uncertainty around President Trump’s tariff deadline, with a 90-day pause on so-called “reciprocal” duties set to expire on 9 July.