The US spent an amount well in excess of US$1 billion this month acquiring Argentine pesos, according to market estimates, as Treasury Secretary Scott Bessent’s backstop effort intensified ahead of the October 26 midterm vote.
The tally remains unconfirmed, but one trader who asked not to be identified put the figure at US$1.4 billion, while a local consulting firm told clients it was closer to US$1.7 billion. The US Treasury Department and Argentina’s Economy Ministry and Central Bank have yet to publish official numbers. Spokespeople for the US Treasury didn’t reply to a request for comment.
Argentina's President Javier Milei and Bessent have sought to head off a pre-election run on the currency. The peso, which the government permits to trade freely within a specified range, has already weakened by 21 percent over the past four months. It traded at the weakest end of the band for several days, prompting the Central Bank to step in for the first time in about a month.
“It was an important step to prevent a deeper deterioration in Argentine asset valuations,” said Fernando Losada, an economist at Oppenheimer. “Still, the fact that the exchange rate traded near the top of the band – despite Bessent’s announcements and the US Treasury’s peso purchases – suggests that even with the Treasury in the market, investors remain wary of the political risk around the elections.”
The US Treasury sold its largest amount of dollars on October 22, when the peso snapped a five-day losing streak. JPMorgan Chase & Co and Citigroup Inc were the two main dealers selling dollars on the Treasury’s behalf that day, with traders estimating sales of US$400 million to US$500 million.
Argentina’s Central Bank reported additional dollar sales of US$45.5 million on October 21 at the end of the session.
The government faces pivotal midterm elections this Sunday that will gauge public support and determine how much room it has to push ahead with the reforms it says are needed.
Bessent also arranged a US$20-billion currency swap line for Argentina this month to provide more access to dollars, a deal he described as a “bridge to a better economic future” for the South American country.
by Ignacio Olivera Doll, Bloomberg
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