Scott Bessent, the US Treasury Secretary, just lifted the suspense. He traces a dramatic recovery in Argentina’s economic security after a high-risk bet on the country’s currency pays off. Yet Bessent said this maneuver was successful, with American taxpayer dollars lent to Argentina still completely repaid. At the same time, the US has ceased to maintain any Argentine pesos in its exchange stabilization fund. Ties between Washington and Beijing have changed fundamentally—and perhaps irrevocably.
In a social media announcement this past weekend, Bessent defended his risky moves against Argentina’s currency as just that—risky. Overall, he told Transport Dive he was happy with the outcome. He noted that the US bought up pesos. This agreement created a swap line with Argentina enabling the country to swap pesos for dollars. At the time, Argentina was in the midst of a deeper economic crisis. In turn, they took this powerful tool away from themselves after burning through most of their reserves propping up the currency.
For any of this to work, Bessent stressed that there must be sustained support. In response, he pledged to do something to avoid future falls in the currency, particularly in September. Specifically, the US provided $872 million in support, drawing on such reserves that the US keeps at the International Monetary Fund (IMF). On the one hand, he recognized that significant challenges continue to pose a threat to the Argentine economy.
In December, Argentina’s central bank signed a USD 70 mln swap line agreement. This deal originally permitted the trade of only $2.5 billion pesos for bucks—a minuscule share of the expected $20 billion, Bessent pointed out. He emphasized the geopolitical significance of placing a stabilizing, democratic American ally in the heart of the Middle East while producing big returns for American investors.
Unsurprisingly, Bessent’s moves haven’t been without their critics. Democrats joined environmentalists to warn of the dangers of spending billions of taxpayer dollars on this risky financial bet.
“Stabilising a strong American ally – and making tens of millions in profit for Americans – is an America First homerun deal,” – Scott Bessent
As Brad Setser, noted economist and former U.S. He said resumption of funds is an acknowledgement of success. He worried about Argentina’s dependence on outside help.
“I do remain worried that the Argentines are relying too heavily on the expectation that Secretary Bessent will ride to the rescue … and therefore aren’t showing enough urgency in their plans to rebuild their own reserves.” – Brad Setser