Michaela
U.S. Treasury Secretary Scott Bessent has signaled that the United States is prepared to provide support to Argentina as the country struggles with soaring inflation, a sharp decline in the Argentine peso, and steep losses in domestic asset values.
Key points:
- U.S. Treasury Secretary Scott Bessent pledged support to Argentina amid peso collapse and high inflation, considering swap lines and currency interventions.
- Investor confidence fell after President Milei’s party underperformed in elections and a corruption probe, prompting peso losses and $1.1 billion in central bank interventions.
- Despite turmoil, Argentine stocks and dollar bonds rose after U.S. backing, boosting optimism ahead of midterm elections and Milei’s reform agenda.
“Argentina is a systemically important U.S. ally in Latin America, and the [U.S. Treasury] stands ready to do what is needed within its mandate to support Argentina,” Bessent wrote in an X thread published on Monday.
Bessent emphasized that a full range of measures is being considered to stabilize Argentina’s economy, including potential swap lines, direct currency interventions, and acquisitions of U.S. dollar-denominated government debt through the Treasury’s Exchange Stabilization Fund.
The Argentine peso dropped significantly last week as investor confidence wavered over President Javier Milei’s capacity to implement promised fiscal and structural reforms following his party’s disappointing results in Buenos Aires provincial elections earlier this month. Market jitters were further intensified by a corruption probe involving a relative of the president.
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In February, the U.S. Department of Justice (DOJ) reportedly opened an investigation into President Milei in connection with the promotion of the LIBRA token, as well as the alleged involvement of the project’s founders and two Argentine entrepreneurs.
The DOJ initiated the probe after receiving reports of criminal operations tied to the LIBRA token, which is alleged to be a large-scale scam valued between $87 million and $107 million and affecting thousands of investors in Argentina.
Additionally, Argentina’s central bank intervened with roughly $1.1 billion over three days to support the peso, a significant move given the country’s limited liquid foreign reserves of around $20 billion. The aggressive defense heightened investor concerns and sparked substantial capital outflows from Argentine markets.
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Despite ongoing economic pressures, Argentine stocks surged to a six-month high after the U.S. Treasury pledged support for the country. International dollar bonds climbed over six cents, and the peso strengthened as investors reacted positively to Washington’s backing of Argentina’s right-wing government ahead of next month’s crucial midterm elections.
Bessent emphasized that the Treasury is confident in President Milei’s commitment to fiscal discipline and pro-growth reforms as essential steps to reverse Argentina’s long-standing economic challenges. He added that he and President Donald Trump are scheduled to meet with President Milei on Tuesday in Manhattan.
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MICHAELA
Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.
