In the midst of increased volatility in both the international and domestic markets, Sam Hewson, Head of Foreign Exchange Sales at Citibank, returned to Argentina after an eight-year absence. The former was influenced by factors such as the AI boom, the U.S. elections, and the war in the Middle East, while the latter was more influenced by next year’s elections. During an interview, Hewson discussed recent events in the extremely volatile global foreign exchange market, which took place in Citi’s Buenos Aires headquarters. “The FX volumes we’ve recorded this year are the best we have seen since 2010 in our global franchises,” he said. He noted that rising geopolitical tensions and risks are creating greater volatility, forcing clients “to be more thoughtful around their hedging and their risk management.” From a geopolitical perspective, he said the need for resiliency has never been greater, as clients “will no longer have a single geographic supply base for their production” following the “previous shocks that they’ve been through.” As a result of factors such as supply chain diversification, increased logistical constraints, and the necessity to operate in a “dynamic, evolving space” including various currencies, exposures have grown “more complex.” The necessity for more proactive risk management and higher hedging, he contended, has thus grown in this context. At another point during the interview, Hewson said his clients “don’t have great conviction on the dollar in general” when considering carry trades involving the U.S. currency.
In developing economies, especially in Latin America, he stressed, they are more firmly committed. “Latin America has been a strong conviction story from our clients who have been looking to invest in currencies that have strong signals from a carry perspective, from a momentum perspective, and, to some extent, resilience from the interest rate environment and the fiscal environment,” he explained. Clients, he added, have been on the lookout for currencies with strong budget surpluses and favourable terms of trade. He clarified that the dollar is not often the currency used to fund those trades. “It’ll be through another currency, which will be the funding vehicle for that expression,” as is the case with the Japanese yen. “The yen has long been a currency against which investors have sold a low-yielding currency and bought a high-yielding one like the Colombian peso or the Brazilian real,” he explained. Hewson returned to Argentina after eight years and expressed his utmost optimism about the path and speed of the economy, praising the reforms that were responsible for the advances. Comparing the current economic situation with that of 2023, he noted: “It feels from an international point of view like a material positive change in dynamic and one in which huge progress has been made in actually a very short amount of time.”
Reducing inflation, stabilising the exchange rate, improving the trade balance, and increasing the fiscal surplus were all goals of Javier Milei’s government. “All of that makes it much more attractive from an international institutional community, and we see that with our clients. We see that much more so now in the conversations we’re having with our clients looking to express positive views on Argentina, and we see that through the activity that we trade with our clients,” he said. When asked about the upcoming elections in Argentina and around the world, he said that elections always bring about some level of uncertainty and volatility, but he couldn’t predict which way that volatility would go. “I think the overwhelming story in Argentina is one of positivity now,” he emphasized. Jorge Lonegro told that while “probably uncertainty will come during the elections time,” it is “totally manageable.” He said that “the price is the price” when asked if the peso was too highly valued, explaining that it is a result of financial inflows and outflows as well as exports and imports. Finally, regarding the government’s financing plan for 2027, he acknowledged that “they have been open that they have the ability to raise funding.”
Asked about the dollar’s weakness in international markets since Trump’s return to the White House, Hewson said the currency had gone through a “challenging period” that began with “Liberation Day” in April 2025 and triggered an “initial knee-jerk sell-off in the dollar.” At the time, he explained, markets had been positioned for a stronger dollar because a narrative of “American exceptionalism” was gaining traction in the United States. “The macro community and our clients were expressing that through this long-dollar type exposure and long-dollar expressions in foreign exchange,” he said. However, the introduction of tariffs worldwide “flipped that on its head and people started selling the dollar.” From that point onward, the idea of dollar devaluation became a relevant market hypothesis. He believes, however, that this pessimistic narrative has now dissipated and that American exceptionalism is “actually becoming more of a relevant story again, particularly with the event of the AI supercycle and all of the productivity-trade-related activity and growth.” This phenomenon is particularly evident in the United States, “but also in certain areas like North Asia, Taiwan, Korea, where they have been the benefactors of that AI supercycle.” According to Hewson, the market took a favourable reaction to the Federal Reserve’s interest rate hike in September, which was led by Kevin Warsh.
Following prior worries about the level of independence that the current chairman of the US central bank would maintain from the Trump administration, this has helped strengthen the credibility of the institution. “I think that is also no longer driving that weak-dollar theme,” he added. In a separate interview, André Secron said that U.S. interest rates had a significant impact on the dollar’s value. although the market has embraced the new administration’s signs of independence, Warsh has also injected instability through other means. “Now we have a Fed who already communicated to the market that he doesn’t want to communicate or give guidance on what’s going to happen to interest rates,” he said. He added that this “adds some uncertainty as well into what is going to happen with dollars correlated to whether there’s going to be hikes or no hikes.”
