U.S. Treasury Secretary Scott Bessent has stated the U.S. is ready to do what is needed to help stabilize Argentina's escalating financial turmoil.
All options for stabilization are on the table, Bessent detailed on social media, referring to Argentina as a systematically important U.S. ally in Latin America.
The announcement aimed to soothe rattled financial markets, which have reacted negatively to recent electoral defeats that cast doubt on President Javier Milei's cost-cutting and free-market strategies.
The peso has been experiencing significant devaluation, prompting investors to flee from Argentine equities and bonds.
Milei, a libertarian economist and supporter of U.S. President Trump, was elected in 2023 campaigning on severe spending cuts to control soaring inflation.
A stable Argentine peso is essential to his policies; however, its value has plummeted as investors grow uncertain about the administration's ability to maintain currency stability.
In recent weeks, the Argentine central bank intervened with measures to prevent further peso decline, including a substantial outlay of $1.1bn to protect its value, albeit at the risk of straining its foreign reserves.
Bessent indicated that U.S. support might take forms such as purchasing Argentine pesos and dollar-denominated debt, with further details to be revealed after President Trump meets Milei in New York.
Milei expressed enormous gratitude for the U.S. pledge, which has resulted in a rally in Argentine stocks and a boost in dollar-denominated debt prices.
He insisted, Those of us who defend the ideas of freedom must work together for the welfare of our peoples.
As Milei seeks to navigate his government through challenging times, including local electoral losses and a bribery scandal involving his sister, Argentina is headed towards national mid-term elections in October that will serve as a litmus test for his controversial economic reforms.
Earlier in April, Bessent's support was pivotal in helping Argentina secure a new $20 billion, four-year loan from the International Monetary Fund.
