Has the US's Gamble on Argentina Paid Off? A Closer Look

Sat Nov 01 2025 01:39:02 GMT+0200 (Eastern European Standard Time)

The US intervention in Argentina, led by Treasury Secretary Scott Bessent, navigates the complex dynamics of international finance and political alliances amid a struggling economy.

US Treasury Secretary Scott Bessent has spearheaded a significant intervention in Argentina in response to a plummeting peso. This strategic move, aimed at stabilizing the Argentine economy and supporting President Javier Milei, has thus far politically benefitted Milei but raises questions about the long-term financial implications for the US, as the peso continues to decline despite efforts to prop it up. The unusual intervention emphasizes the delicate balance of US foreign policy and the challenges of maintaining economic stability in a nation with a history of financial crises.

US Treasury Secretary Scott Bessent has been the point-person entrusted with selling financial markets on some of President Donald Trump's riskiest economic gambles: sweeping global tariffs, trade talks with China and preparations to install a new leader at the US central bank.

But Bessent's trickiest task may just be the White House bet on Argentina.

The US stepped onto the scene in mid-September, responding to a plunge in the peso - the Argentine currency - which officials feared could imperil Trump ally President Javier Milei and his party in looming midterm elections.

Bessent said the US would do whatever was needed to stabilise the situation, calling the country a key ally in the region.

In political terms, the US intervention - which included purchases of pesos and the establishment of a $20bn (£15bn) currency swap line that gives the Argentine central bank access to dollars - was a success for Milei. His party not only fended off losses in the midterm elections but made inroads, strengthening his position.

But whether the US intervention in the country will be a success financially is another question. The peso has fallen roughly 30% this year, including roughly 4% over the last month. The drop came despite the US commitments - and a modest rally after the election.

It's an indication of the ongoing risk. At the end of the day, the US could find itself holding a pile of pesos worth much less than they were originally. The intervention in Argentina was a highly unusual move - especially from a White House known for its America First approach.

Milei has endeared himself to conservatives in the US with his embrace of free-market reforms and radical spending cuts. He has met frequently with Trump, who has called him his favourite president.

But the US has rarely offered financial bailouts to other countries - especially in a case that posed no wider financial stability risks - and direct purchases of a struggling emerging market currency are unprecedented, says Brad Setser, senior fellow at the Council on Foreign Relations.

Adding to the risk is Argentina's long history of currency devaluation and debt default, including most recently in 2020.

Few are positioned to be as aware of the potential pitfalls as Bessent, who made his name as a currency trader working for George Soros. Bessent famously took part in the 1992 speculation against the British pound.

This time, Bessent finds himself on the opposite side of similar gamble. He has defended his moves, invoking the spectre of fellow South American country, Venezuela, and arguing that failure to shore up Argentina as a US ally could lead to destabilisation in the region.

These results are a clear example that the Trump Administration policy of Peace through Economic Strength is working, Bessent wrote on social media after the recent election in Argentina.

On Wednesday, Bessent posted again to say: the Argentine economic bridge has now turned a profit for the American people.

The US Treasury Department did not respond to inquiries seeking more details.

But it has kept quiet about key information needed to assess Bessent's claims - including the timeline and scale of its peso purchases - or sales - and what, if any, other assets the Argentine government pledged in order to secure the swap deal.

Analysts have estimated the US has purchased as much as $2bn worth of pesos so far - hardly an earth-shattering figure.

But Democrats have criticised the help at a time of White House spending cuts and an ongoing government shutdown, accusing Bessent of wanting to protect finance buddies with investments in the country.

Even some members of Trump's own Republican Party have questioned how the aid aligns with the president's America First goals.

Bessent has disputed any characterisation of the US support for Argentina as a bailout, promising there will be no taxpayer losses and even declaring the peso undervalued.

But while that could be true for a short-term trade, that view is not the general consensus. To the contrary - most analysts say the peso is overvalued.

Economists say maintaining such limits is not sustainable. They cite the surge in Argentines travelling to make purchases in neighbouring countries where their money travels farther as one of the signs that the peso is being held artificially high.

Economists say they expect the bank will have to change its policy to allow the peso to fall more - or the country risks needing another bailout. That choice presents a dilemma for Bessent, given his promises to guard the US against losses.

Is the US willing to provide support to Argentina so that Argentina can defend the peso at this level?

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