Argentine peso weakens to fresh low despite US interventions

https://www.ft.com/content/815ef487-0d0e-430c-b140-9bc39dbd1a53

66•zerosizedweasle•3mo ago

Comments

programmertote•3mo ago

What's the benefit for trump and co. helping out Argentina (other than helping a kindred spirit, the current Argentinian president)? I really can't see any benefit for the US in this move. Hopefully, someone more versed in economics can explain what the missing angle is, if any.

jordanb•3mo ago

Apparently there are a lot of hedge funds invested in Argentina. Presumably Trump's support will decline once they've covered their positions.

ta9000•3mo ago

It really is that simple, corruption.

gdulli•3mo ago

Make America's Accredited Investors Great Again

donavanm•3mo ago

Its intervening to save a democratic and aligned country from yet-another economic collapse and political crises at their upcoming national elections. Not dissimilar to what the us did for mexico during the peso crisis and revaluation in the 90s.

I dont know why “bail out” is the headline term, it’s closer to a “currency backstop” AFAIK. The us is effectively extending hard dollars in exchange for pesos, allowing the argentine govt to not be destroyed in the open currency markets. If this works the peso would retain (or gain) value as the country recovers (economically, due to the ongoing reforms) and the us could feasibly even profit.

On the USD and peso backstop its important to note that “dollarization” was a big talking point for milei. But argentina never had anywhere close to enough USD reserves or even USD economic flows to make that at all feasible ever. Like many many billions away from plausible. So there was a background theme of trying to catch them out on that as well since the last elections.

Edit: and for context the current run against the peso is effectively because of dumb milei posturing ahead of regional elections, and a strong populist/peronist result. Lots of fear that if its repeated at the upcoming national elections then argentina goes back to kirchner style populism and debt/economic blow up.

jordanb•3mo ago

Argentina wouldn't be "destroyed" by a currency devaluation. But Milei wants to keep the Peso strong so his upper/middle class supporters can keep buying electronics and going on international vacations.. at least until the next election.

durandal1•3mo ago

Normal productive people doing normal stuff reframed through the lens of pettiness and jealousy.

Daishiman•3mo ago

Keeping middle class salaries artificially high while destroying high value industry and increasing debt isn’t pettiness.

Are you Argentinian? Do you even realize this is at least the third or fourth time in the country’s history where this exact scenario has happened?

coliveira•3mo ago

The only people who will benefit from this are the financial elite in Argentina who are selling pesos and getting dollars as quickly as they can, and the hedge funds who invested in Argentina and need a way out. The current government, which is a bad joke, will never win anything else. The economy will continue to go south because this plan doesn't work even in the short term.

donavanm•3mo ago

I personally think milei the politician is a clown. And many of his statements are just offensive to anyone who can spark two braincells together. I also thought he was going to burn it all down in a blaze of hubris after his election.

But its hard to argue with arresting the inflation, gdp, and budget surplus numbers. Im not sure how the economy is “going south.” Generously the policies have arrested the slide?

I dont imagine the typical argentine is better off with 200% inflation, 50% unemployment, and a 57% poverty rate. Avoiding that return seems to be quite a benefit for just about everyone?

Daishiman•3mo ago

> But its hard to argue with arresting the inflation, gdp, and budget surplus numbers. Im not sure how the economy is “going south.” Generously the policies have arrested the slide?

Sure it is. Public education and science funding is at a historic minimum that is destroying tons of long term scientific and educational initiatives. Roads are falling apart in a gigantic country and what’s left of rail is being scrapped for parts and sold to private entities that will let rails decay just like everywhere else where it was privatized.

Consumer spending continues to go down, industry is not competitive with this fake exchange rate causing a loss of high quality jobs and forcing everyone to take a second job as an Uber driver.

We’ve seen this play out again and again. The government will default, then hyperinflation and social crises until the low prices of everything make the economy competitive again.

This has played out again and again with far more competent governments and we keep being right about it.

nradov•3mo ago

The Argentinian government was literally out of cash. There was nothing left and no ability to borrow. So complaining about cuts to education, science, and transportation seems a little silly. How exactly were they supposed to pay for it?

In the long run there are things they can do to raise revenue and cut waste. But when you're stuck in a deep hole the first thing you need to do is stop digging.

rightbyte•3mo ago

One way to cover expenses is to raise income. The dude running the gov is a libertarian. I don't think he sees running out of other peoples money as a problem. It might be the point. "Big gov".

nradov•3mo ago

I don't think you understand the severity of the cash crunch they were facing. How exactly could they raise government revenue fast? Tax rates were already high and compliance was low. Can't get blood from a stone.

Longer term they could maybe sell off some state assets but it takes time to bring in any cash that way.

Daishiman•3mo ago

The severity of the cash crunch has been seen time and time again with the difference being that loans were used to fund a functioning government instead of being used by rich people to buy cheap US dollars to fund their vacations in Europe.

nradov•3mo ago

What's your point? Regardless of what was done before there were no more loans available in the short term.

Seriously, what was the alternative? If you have no money and no one will lend you any money then the only remaining options are to run the printing presses (hyperinflation) or stop spending.

Daishiman•3mo ago

The alternative was to take the loans, keep the existing currency control mechanisms, and run a moderate amount of inflation and exchange rate to keep the economy competitive while the income from exports in mining and ag kept coming in.

What's been done instead? Open currency markets while intervining to keep the US dollar artificially cheap, losing productivity and competitiveness and thus losing taxable income while funding cheap imports for consumer goods.

nradov•3mo ago

No, you're really missing the point. There were no loans being offered at the time the budget cuts were made. There were no loans to take. Their credit line had been exhausted. They had run out of other peoples' money. How are you not getting this?

Daishiman•3mo ago

No, I get the point because I've spoken to several specialists on the matter. The budget cuts Milei performed were far higher than what even the most conservative IMF program proposed.

There was no technical reason to cut budget to that level. It pure ideological motivation.

IG_Semmelweiss•3mo ago

>>> No, I get the point because I've spoken to several specialists on the matter. The budget cuts Milei performed were far higher than what even the most conservative IMF program proposed.

You clearly don't. There was 2100% annual hyperinflation on the day Milei assumed. "Specialists" said that cutting inflation to monthly single digits couldn't be done, period.

Milei did it in less than 6 months.

The current predicament is a political one, not an economic one.

He allowed Argentinians to finally experience the freedom of a floating exchange rate. Under normal circumstances, if the Argentinians decided they had enough of the peso and wanted to forcefully commit to the USD, they could do so at whatever rate was offered.

The political problem is that now there's an election this weekend, and he now has to explain why Argentinians (and investors) don't want pesos if the FX goes too high. He should not have put the govt in the position to defend a peso... that Argentinians themselves do not want.

After the election, there will be nothing to speculate against, the currency will find whatever equlibrium was needed, and the "specialists" will go back to their corner, where they hide for being wrong.

Again.

AbraKdabra•3mo ago

> is at a historic minimum that is destroying tons of long term scientific and educational initiatives.

Education was always shit. I live in Argentina, the PISA results from last exam are demential and I doubt they can get worse, don't lie to people please. There's absolutely no way in the world education can get to today levels in one and a half years of Milei.

> Roads are falling apart in a gigantic country

Roads were NEVER good, either you don't live in Argentina and you definitely can't have an opinion, or you live here and never left your house. Again, please don't lie to people, we have been living in hell for 20 years, nothing breaks like you say in one and a half years.

> and what’s left of rail is being scrapped for parts and sold to private entities that will let rails decay just like everywhere else where it was privatized.

Whoa you have a crystal magic ball? The kukas governed for 20 years, don't tell me all the railroad system decayed exactly when Milei assumed...

Daishiman•3mo ago

"Kukas"

Ok, good to know you have no idea what you're talking about.

Everything you're saying is hyperbole. "Things are bad" is not a serious talking point. Things are relative and between the education in Zimbabwe and Denmark there is a huge gap.

watwut•3mo ago

It is easy to arguw with those. The plan of artificially keeping currency is not a new one and was tried multiple times before.

Each time, you have initial seeming success and then crash.

clipsy•3mo ago

> I dont know why “bail out” is the headline term, it’s closer to a “currency backstop” AFAIK. The us is effectively extending hard dollars in exchange for pesos, allowing the argentine govt to not be destroyed in the open currency markets. If this works the peso would retain (or gain) value as the country recovers (economically, due to the ongoing reforms) and the us could feasibly even profit.

If.

nocoiner•3mo ago

No no no, you don’t get it, it’s not a “bailout,” it’s simply a “magic bean repurchase facility” whereby dollars are made available to holders of magic beans. When the magic beans sprout and reach the sky, the profit could be considerable.

donavanm•3mo ago

FX is magic beans? I guess if youre of the mind that “fiat is theft”. But in that case Im not sure why youd care if you can always go back to farming (digital) gold.

Although, to be fair, I can see the perspective that argentine _debt_ is magic beans funded by hopes, wishes, and the IMFs argentine refinancing.

sofixa•3mo ago

> FX is magic beans?

> Although, to be fair, I can see the perspective that argentine _debt_ is magic beans funded by hopes, wishes, and the IMFs argentine refinancing.

Exactly. FX isn't magic beans. The currency of a country that has defaulted more time than anyone cares to remember is magic beans though.

There is a reason for the old saying "There are 4 types of economies - developed, developing, Argentina and Japan".

8note•3mo ago

couldn't the US do better by buying the pesos after the crash, and then when the argentine peso regains its value as part of recovery, the US gets a bigger profit?

nashashmi•3mo ago

This is the first attempt at aligning the world to a Trump World Order and away from the New world order started by Eisenhower.

clipsy•3mo ago

Perhaps some of his administration consider Argentina a back-up in the event that things go poorly for them in America. I've heard of something like that happening before.

estearum•3mo ago

Scott Bessent is besties with Rob Citrone who is one of the largest purchasers of Argentine debt. He lobbied Bessent, Bessent said "Sure!"

Sometimes it really is that simple.

https://paulkrugman.substack.com/p/bailing-out-bessents-budd...

https://www.nytimes.com/2025/10/09/us/politics/argentina-bai...

https://www.motherjones.com/politics/2025/09/trump-argentina...

martythemaniak•3mo ago

Talking about the naked, open corruption and bribery is considered gauche in polite society. Executing random Colombian fisherman, OTOH, is perfectly fine.

jauntywundrkind•3mo ago

The connection is very clear. Amazing Krugman piece. There's still a little bit of a why question to me? What will Citrone or anyone else ever be able to provide back, since they all know this is going to fail, & are using this loan to jack up prices & exit their positions?

Maybe there's some more elaborate way this will enrich certain American cronies. Maybe.

But I tend to think the answer comes if we look back 80 years. A lot of bad evil people needed a friendly state to run to after WWII ended. Today, beyond just being friends-of-an-(evil-doing)-feather together with some other exploitative public-services-destroying extremists, part of me thinks, maybe perhaps: Argentina is being set up as a new exit, a new place to flee too, when justice comes a calling.

rubyn00bie•3mo ago

From the Mother Jones article:

> Citrone, the co-founder of Discovery Capital Management, is also a friend and former colleague of Bessent—a fact that has not been previously reported in US media outlets. Citrone, by his own account, helped make Bessent very wealthy.

I think it's simply that Bessent can give his buddy (Citrone), who made him (Bessent) "very wealthy," a bailout at zero cost to any of them. $20 billion is really insignificant for the US government, even if a gross waste of tax dollars, and they know there's not going to be a single repercussion.

> Argentina is being set up as a new exit, a new place to flee too, when justice comes a calling.

I too have been thinking that lately. It wouldn't be ideal for any of them but, from their perspectives, it surely would be better than the alternative.

treis•3mo ago

>So while millions of children must die to save a few billion dollars, taxpayers are on the hook for billions more to bail out Bessent’s hedge fund buddies in a predictably futile attempt to save the Elon Musk of the South.

It's a good thing he didn't give into hyperbole...

magicalist•3mo ago

The sources are linked right in line, so which part is hyperbole?

https://ph.ucla.edu/news-events/news/research-finds-more-14-...

cobbal•3mo ago

Which part of that sentence do you think is hyperbole?

> Forecasting models predicted that the current steep funding cuts could result in more than 14,051,750 (uncertainty interval 8,475,990-19,662,191) additional all-age deaths, including 4,537,157 (3,124,796-5,910,791) in children younger than age 5 years, by 2030.

https://www.thelancet.com/journals/lancet/article/PIIS0140-6...

croon•3mo ago

That is the projected death toll of cutting USAID, which had a total budget half of the Argentina bailout.

refurb•3mo ago

The claim that it was done to help his hedge fund buddies has no source.

piva00•3mo ago

It will be damn hard to get Bessent or close sources to him to confirm it.

Sometimes you have to go by circumstantial evidence which, in this case, is quite clear: Rob Citrone helped Bessent to make a lot of money, Citrone is deeply invested in Argentinian bonds and overall economy; Bessent controls the US purse, we can be very suspicious about this move since it doesn't make any sense for the US to burn money to help bail out Argentina.

If you have a better theory for why this was done it might help reduce the suspicious nature of it. Just calling "there are no sources" doesn't.

refurb•3mo ago

Sure! The US sees Milei as an ally. The US likes having allies.

So the US lends $40B to Argentina as a backstop to their currency controls.

That seems like a much more reasonable scenario than Bessent convincing Trump to use money to help his investing buddy?

vkou•3mo ago

1. Every dollar that he can spend on whatever he wants without congressional permission is another nail in the legal theory of 'The president is an unaccountable god-king.'

2. What kind of god-king wouldn't reward his friends and allies?

dysoco•3mo ago

What follows is just my theory, but I think it's merely a matter of politics and culture.

Trump doesn't want Milei's government to fail, he needs successful examples of neoliberal, anti-woke, populist, anti-inmigration governments and Milei is probably his best bet. He's not helping Argentina, he's helping a political ally's party.

Betting on the Peso doesn't make sense. It's a lot of money but it's <1% USA's budget. Trump was probably thinking the American media would not pay too much attention to it but apparently it slightly backfired and they did.

loeg•3mo ago

Why would Trump care about neoliberalism in the slightest? Trump is anti-neoliberal.

dysoco•3mo ago

Fair enough, forget I said neoliberalism but the rest of the keywords apply. Evidently they don't care that one is neoliberal and the other is protectionist, I guess they care more about anti-wokeism at the end of the day.

thehappypm•3mo ago

If America saves Argentina, and Argentina becomes a powerful country again, that is a powerful ally we could have for a century.

anonymars•3mo ago

Have you paid any attention to how the US has been treating its actual existing powerful allies this year? Is Argentina a more valuable ally than, say, Canada?

nradov•3mo ago

I'm not convinced this bailout is good policy but you could maybe make a case that it's the least bad option. If the USA doesn't help Argentina then the lender of last resort becomes China. Do we want China to gain more control and influence in the Americas?

https://sccei.fsi.stanford.edu/china-briefs/chinas-overseas-...

estearum•3mo ago

The US is not the global or continental lender of last resort. The IMF traditionally holds that role and it appears to be at its limit with regard to Argentina due to serial defaulting, political instability, corruption, and overall lack of credibility.

Not compelling at all to say the US just generally has an imperative to buy debt or lend to countries whenever they're least creditable just because China might do it anyway.

nradov•3mo ago

Well that was my point. Argentina probably can't borrow any more from the IMF so that leaves the USA or China. China might do it for political reasons even if they lose money so we need to consider whether we're willing to accept the negative geopolitical consequences of that.

estearum•3mo ago

If the US had any desire to maintain influence in the Americas (or anywhere else), it wouldn't be calling their leaders drug lords, cutting off foreign aid, engaging in extrajudicial killings off their shores, threatening them with carrier groups, violating previously agreed-upon trade deals, etc.

Argentina also would not be getting some special treatment. There are far more strategically important and similarly struggling economies in the Americas and elsewhere that the US could choose to assist and is not.

There's just no coherence to this theory.

This is rich guys helping out their rich guy buddies using taxpayer dollars.

zmgsabst•3mo ago

The US is playing nice with Argentina and El Salvador while harsh with Colombia and Venezuela due to the perceived difference in their politics.

Carrot, stick.

> This is rich guys helping out their rich guy buddies using taxpayer dollars.

Almost all foreign aid is this, complete with kickbacks such as donations to the Clinton Foundation, etc. Even domestically, eg, the high percentage of homeless and poverty support disappearing into NGO pockets.

igor47•3mo ago

What does "the high percentage" mean? I donate plenty of money to both foreign and domestic non-profits and a pretty bad overhead is 20% in my experience. I generally aim for overhead ratios of 10% or so and have no problems finding lots of quality orgs in that range.

zmgsabst•3mo ago

That far more than 20% disappears into petite bourgeoisie pockets in government programs — what we were talking about in this thread.

Eg, of the budget in Seattle.

estearum•3mo ago

It's crazy how you can't just like give specific information about what exactly you're talking about. Is it just vague gesticulation all the way down?

zmgsabst•3mo ago

It’s an intentionally difficult to parse network of public and private groups.

I did say specifically what I was talking about — public funds like Seattle, where $18000/homeless per year disappears through the network into employee pockets while delivering substantially less to those it’s nominally for.

https://www.pacificresearch.org/despite-big-budgets-homeless...

I think you’re being intentionally dense.

estearum•3mo ago

"A lot of money is spent and the outcome is not as good as expected" does not indicate "an intentionally difficult to parse network of public and private groups" where money "disappears through the network into employee pockets."

Here's another possibility: the problem is much more challenging or more expensive to solve than one would expect from the outset. Or the challenge of the problem just vastly outstrips the talent of the people dedicated to solving it.

I don't know about you, but I encounter unexpectedly hard problems or insufficiently talented problem-solvers probably 1,000 to 10,000 times more frequently than I encounter complex conspiracies to steal money.

I think you need far more evidence than you have to make the claims you're making. Which is why they aren't specific.

hulitu•3mo ago

> it wouldn't be calling their leaders drug lords, cutting off foreign aid, engaging in extrajudicial killings off their shores, threatening them with carrier groups, violating previously agreed-upon trade deals, etc.

The world policeman is doing world policeman things. Luckily things are starting to get worse for the world policeman so those things might happen less.

actionfromafar•3mo ago

Why would it happen less? Empires don't go down in peace. The dying Soviet empire morphed into the incredibly violent, dying Russian empire under Putin.

estearum•3mo ago

> The world policeman is doing world policeman things

Actually a lot of this is extremely aberrational, even measured by the United States' own "unique" standards.

mrcwinn•3mo ago

I don't know, it sounds pretty compelling to me.

hulitu•3mo ago

IMF is an US intrument.

estearum•3mo ago

Up to you if you want to describe holding a 16% controlling stake as "its instrument," but I don't think many would.

In practice, your point is demonstrably false by the fact that IMF is likely backing away from further financing to Argentina while the US is stepping in.

thrance•3mo ago

If your goal is to help the Argentinian people, you would let Milei's extremely destructive and incompetent government fail and fall. This bailout only gives "General AnCap" more time to sell the country's future.

dzhiurgis•3mo ago

Making people pay for public transport and power isn’t exactly destruction.

nradov•3mo ago

And then what? Even if Milei fails and leaves office, the Argentinian people will need a balanced budget. They have run out of other peoples' money.

bediger4000•3mo ago

There is no benefit for the US as a country. You're forgetting that Trump's first impeachment showed us he runs foreign policy for his own benefit. Trump is almost certainly getting some of that money as a kickback.

Speculation is that some of Bessent's buddies are financially exposed to an Argentinian default, and that this keeps them safe from losing money on a sovereign default.

denkmoon•3mo ago

Trump views Milei as a buddy, it's that simple. The personal angle is more important than you might think. Plenty of insiders have discussed this aspect of Trump's foreign policy, most recently I watched this podcast with John Bolton talking about it https://www.youtube.com/watch?v=T_BB-96D6qg

nine_zeros•3mo ago

They used taxpayer money to help the original investors into Argentina who invested a few years ago. It went to wall street.

WhereIsTheTruth•3mo ago

I'd guess it's because of its natural resources and "cheap" labor which is only getting cheaper, whether this was done intentionally or not, it seems to go hand in hand with CHIPS Act

https://www.csis.org/analysis/south-americas-lithium-triangl...

watwut•3mo ago

Billionaire friends of mister Besset need that bailout, cause they invested into Argentina. They need out.

That is it.

hulitu•3mo ago

Monroe doctrin.

piva00•3mo ago

Bessent's friend Rob Citrone is heavily invested in Argentinian bonds, and companies [0].

[0] https://www.bloomberglinea.com/2024/10/18/exclusive-rob-citr...

morninglight•3mo ago

Maybe he needs a new, low cost supplier?

https://youtu.be/_W0FUeeiDcU

sailfast•3mo ago

The intervention doesn't work very well if just after you put in your money, you broadcast to the world via your social media website that Argentina is DYING.

mmooss•3mo ago

And putting in your money in the first place tells the world that things are pretty bad. Also, because the US government right now strongly embraces being highly flexible, able to change its mind in a moment, longer-term support is not reliable.

dlcarrier•3mo ago

I would say it's perhaps because of them, considering the long-term effects of foreign aid, but the metric itself is nonsense.

Disregarding the noise present in all exchanges, the Argentine peso has been continuously dropping, compared to USD, for decades. If it were to have a sustained climb, that would be quite the event, but that aside the question is how fast it is falling, and whether the rate is increasing or decreasing. An extreme one-time rise or fall would be significant, but that hasn't happened.

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Argentine peso weakens to fresh low despite US interventions

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