US Treasury Secretary Scott Bessent has become the key figure defending some of President Donald Trump’s biggest economic decisions, including global tariff rules and renewed trade talks with China. One of the most delicate tests of the administration’s economic strategy is now unfolding in Argentina.
In mid-September, the US moved to help stabilise Argentina’s peso, which had sharply weakened ahead of the country’s midterm elections. Washington feared that continued financial instability could weaken President Javier Milei, a close political ally of Trump who has been implementing sweeping austerity measures and market reforms.
The US responded with direct purchases of pesos and the establishment of a 20 billion dollar currency swap line that allows Argentina’s central bank to access dollars. The move helped Milei’s party secure strong gains in the elections and strengthen its political position.
Whether the intervention succeeds financially remains uncertain.
Currency Risks Remain
Despite the support, the peso has fallen about 30 percent this year and continues to face pressure. Analysts warn that the US could end up holding pesos worth significantly less than when they were purchased.
Direct intervention in a foreign currency is rare for Washington. The US typically avoids such actions unless there is a broader global financial threat. Argentina’s long history of devaluation and debt default adds to the uncertainty.
Political Alignment Drives Partnership
Milei has become popular among conservatives in the US for his rapid spending cuts and free market approach. He has met several times with Trump, who has referred to him as his favourite president.
Bessent, who previously built his career as a currency trader working with George Soros, has defended the US intervention. He argues that supporting Argentina is necessary to prevent political and economic instability in the region. He described the recent election results as evidence that the administration’s approach is working.
He later stated that the intervention had already produced a profit for the US, although the Treasury has not released data to confirm this.
Calls for Transparency
Democrats have questioned why financial support is being extended abroad during a domestic government spending standoff. Some Republicans have also asked how the move aligns with Trump’s America First agenda.
The Treasury has not disclosed key details such as the volume of peso purchases, the timing of trades or any collateral Argentina provided to secure the swap line.
Economists say the Argentine central bank has been using its reserves to hold the peso at a stable level. Many believe the currency is still overvalued and will eventually need to fall further. That would leave the US facing a decision on whether to continue supporting the peso or step back and accept losses.
Uncertain Path Ahead
Business confidence and the Argentine stock market have improved since the midterms, but the peso has not recovered at the same pace. International lenders remain cautious. Analysts say longer-term currency stability depends on Milei’s ability to push further reforms.
Some experts believe the peso could strengthen in the medium term if reforms are maintained, but most expect more volatility ahead.
For now, many economists anticipate further depreciation of the currency, which could test the limits of US support and the assurances given by Bessent that taxpayers will not face losses.
