When US Treasury Secretary Scott Bessent decided Thursday to buy Argentine pesos in the market to shore up the South American economy, it didn’t turn to a US bank. Instead it chose Spain’s Banco Santander SA.
The choice of Santander to become Treasury’s conduit to the peso came down to two crucial factors. One, the Spanish lender is part of a small group of so-called primary dealers in US treasuries, which means it has a longstanding relationship with the Federal Reserve. The other is that it has large markets teams in both New York and Buenos Aires.
A spokesman for Santander declined to comment on the operation, and US Treasury didn’t immediately disclose how much it bought in pesos.
Beyond propping up the peso, Bessent announced a US$20-billion lifeline for the Argentine economy — a move with few precedents in recent decades. The announcement followed several days of discussion between the US and Argentine economic teams, and more than a year of relentless praise from President Javier Milei to Donald Trump.
The rescue aims to pull Argentina’s financial markets out of deepening turmoil, and help Milei’s party win the the country’s October 26 midterm elections that investors are closing watching for signs of political strength. Milei’s Treasury all but drained its dollar stockpile to prop up the peso over the past week. Argentine assets soared Friday, following the announcement by Bessent.
Santander became primary dealer to the Fed following its 2021 acquisition of broker Amherst Pierpoint Securities. While Argentina represents less than one percent of Santander’s balance sheet, the bank has a a strong presence in the country.
by By Rodrigo Orihuela, Bloomberg
Comments