US Faces High-Stakes Bet on Argentina as Peso Struggles Despite Support
The US government is facing growing questions over its risky financial support for Argentina, even as Washington defends its decision to help a key political ally.
US Treasury Secretary Scott Bessent, trusted with selling President Donald Trump’s bold economic policies, played a central role in backing Argentina during a sharp fall in its currency, the peso. The move was designed to support Argentine President Javier Milei, a vocal Trump supporter, ahead of midterm elections.
Why the US Stepped In
In September, the US launched an unprecedented intervention, buying pesos and offering a $20 billion currency swap line to Argentina’s central bank. Officials argued the help was necessary to prevent economic turmoil and protect a key regional partner.
Politically, the move paid off. Milei’s party not only avoided election losses but gained ground. Trump celebrated the outcome as proof that his strategy works.
But the financial side is less certain.
Peso Keeps Falling
Despite US assistance, the peso has dropped about 30% this year, raising doubts about whether Washington will face losses. Analysts warn the US could be left holding weaker pesos if the currency continues to fall.
Argentina has a long history of currency crashes and debt defaults, making the bet even riskier. Experts say the surprise move contradicts Trump’s “America First” stance and could become a costly gamble.
Criticism and Questions
Democrats and some Republicans have questioned why the administration is spending billions abroad, especially during domestic budget cuts. Critics say the support benefits financial allies more than American citizens.
Bessent insists there will be “no taxpayer losses” and argues the peso is undervalued. But most economists disagree, noting that Argentina is artificially propping up the currency and may eventually have to let it fall further.
What Happens Next
If Argentina cannot maintain its currency limits, the US must decide whether to pour in more support or accept losses. Analysts say the peso may weaken further unless economic reforms progress.
For now, financial markets remain cautious. While Argentine stocks have surged after the election, many global lenders are still hesitant to re-enter the country.
The US bet may deliver long-term gains — or become a lesson in the risks of mixing foreign policy with currency intervention.
