MW The U.S. stands ready to bailout Argentina. But it's not a sign of systemic regional problems.

By Greg Robb

'I don't think it it's going to affect U.S. interest rates,' one forex trader says of Treasury secretary's stance

U.S. Treasury Secretary Scott Bessent, fourth from left, with Argentina President Javier Milei, center, and other officials at a bilateral meeting in April.

Treasury Secretary Scott Bessent's pledge of support for Argentina on Monday is not a sign of broader economic instability in Latin America that might spill over into U.S. financial markets, experts said.

In a series of posts on the social-media platform X, the Treasury secretary said all options were "on the table" to help Argentina manage its ongoing currency crisis.

The exact nature of U.S. help would come after President Donald Trump meets with Argentina President Javier Milei in New York on Tuesday, on the sidelines of the U.N. annual meetings, Bessent added.

Marc Chandler, managing director at Bannockburn Global Forex, said he thought Argentina's crisis was relatively isolated to its domestic economy.

"It's not systemic. I don't think it it's going to affect U.S. interest rates," Chandler said in an interview. The currencies of Brazil, Mexico and Columbia have been showing strength, he noted.

Robin Brooks, a senior fellow at the Brookings Institution agreed, calling Argentina's economic problems "totally idiosyncratic" in an interview with MarketWat

Since 1991, the Argentine peso (USDARS) has been pegged to the dollar, even though the two countries are very dissimilar. This has led to a perennial cycle of currency crisis.

Milei has been a close ally of Trump's and somewhat of a darling of Wall Street. He came into office in December 2023 promising to cut government spending and free Argentina's economy from regulation. He was the official who handed Elon Musk a chainsaw at a conservative gathering outside Washington in February, when the Tesla Inc. $(TSLA)$ chief executive was at the apex of his influence in Washington.

Despite all of his reforms, Milei was unwilling to weaken the country's currency. Chandler said that Milei missed a chance to lower the value of its peso last year.

A weaker currency can help lower Argentina's trade gap, which would boost its export sector. But it would likely be politically unpopular because it can also spark higher inflation and reduce savings.

A recent setback in local elections for Milei's party has sparked worries that his reform program might be derailed, and the currency has tumbled.

Many U.S. economists think that Argentina must free up the exchange rate. U.S. intervention to support the peso is all well and good but "it doesn't change the underlying reality, which is the peso is substantially overvalued," Brooks said.

Mark Sobel, a former U.S. Treasury official now with the Official Monetary and Financial Institutions Forum, a research institute, said external support may buy time for the government but runs the risk of financing capital flight unless the country moves toward a float in a timely manner.

Chandler said he thinks Bessent will decide to use funds from the Treasury's Exchange Stabilization Fund to directly buy Argentina's currency or its U.S. dollar-denominated government debt. Bessent doesn't need approval of Congress to make those purchases, he noted.

These purchases would involve substantial credit risk to the U.S. government, Brooks said. He thinks Bessent's comments are "very significant" and might buy time for Milei's government to get through the upcoming elections on Oct. 26 before it making painful reforms. That might limit U.S. help to verbal intervention.

Argentine financial assets ARGT $(BBAR)$ $(GGAL)$ $(BMA)$ soared after Bessent's pledge of support. The Argentine currency is down 4.9% versus the dollar DXY in September, and more than 27% for the year to date.

Chandler said he thought the Trump administration seemed to be following a policy to help countries in the Western Hemisphere while pulling back from commitments in other regions, including Ukraine.

Argentina has been shunned by private markets since it defaulted on its debt in 2019, Brooks noted. Since then, the country has been mainly receiving large loans from the International Monetary Fund.

-Greg Robb

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September 22, 2025 14:31 ET (18:31 GMT)

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