The US Treasury sold dollars again on Tuesday through Banco Santander in Argentina’s currency market as the peso neared the ceiling of its trading band, according to people with direct knowledge of the matter.
The peso fell more than one percent to a record low of 1,490.5 per US dollar at the close in Buenos Aires, less than one peso away from the weakest limit of the government’s trading band. The Treasury was the sole seller of dollars until midday, one of the people said. It wasn’t immediately clear how much the US sold via Santander.
Treasury’s efforts to shore up Argentina’s currency are part of a broader effort by Secretary Scott Bessent to stabilise the South American economy before President Javier Milei’s party faces midterm elections Sunday that investors are closely watching. Beyond buying pesos, the US Treasury signed a US$20-billion currency swap line with Milei’s Central Bank and is negotiating a private-sector support package of the same size.
“Our stabilisation agreement is a bridge to a better economic future for Argentina, not a bailout,” Bessent said earlier Tuesday in a post on X.
The US Treasury Department’s press office and Argentina’s Economy Ministry didn’t immediately respond to requests for comment, while the nation’s Central Bank and Santander declined to comment.
Argentina lifted currency controls in April and allowed the peso trade within a range that expands in each direction every day. Treasury’s dollar sales Tuesday aimed to cap Argentina’s official exchange rate near the top of the band as pressure built during late-morning trading, people said. Authorities have used similar end-of-session bursts in recent days to steady the market.
In the past two weeks, Bessent disclosed on X that the US had bought pesos in both the spot market and parallel “blue-chip swap” markets in Argentina, and he has argued the currency is undervalued. US President Donald Trump met with Milei at the White House on October 14, and conditioned US financial aid to Milei’s party winning the midterms.
Last Friday, currency traders in Argentina estimated that Treasury sold more than $200 million to defend the peso, building on sales from previous sessions.
by Ignacio Olivera Doll, Bloomberg
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