Juan Pablo Pino / EPA
Javier Milei, president from Argentina
Trump is demanding that Milei distance himself from China in return for the exchange rate agreement that is helping to restore investor confidence in the Argentine peso.
The US Treasury last week finalized a 20 billion dollar exchange rate agreement with Argentina and began buying pesos on the open market.
US Treasury Secretary Scott Bessent announced the measures on the social network X, declaring that Washington was ready to take “any exceptional measures that are justified to provide stability to markets“.
The announcement arrived after four days of negotiations between Bessent and the Argentine Finance Minister, Luis Caputo, held alongside officials from the International Monetary Fund (IMF), which already manages a 20 billion dollar loan program with Argentina.
Although the Treasury has refused to reveal details about the peso purchases, the intervention is expected to use the Exchange Stabilization Fund (ESF) of 221 billion dollars from the department and the special withdrawal rights of the IMF in the USA, advances the.
Democrats quickly came out with harsh criticism of the move, arguing that Trump was funding a foreign government while the U.S. remains in a partial government shutdown. Some Democrats have even introduced a bill to prohibit the use of the ESF for such interventions.
Cutting with China will be the counterpart
With “America First” being one of his most famous political mottos, it was to be expected that this help from Trump would not come without compensation.
In an interview with Fox News, Bessent rejected accusations that the deal amounts to a financial bailout, insisting that “no money was transferred to Buenos Aires” and that the decision is strategically beneficial to the US, citing Argentine President Javier Milei’s promises to open up the rare earth sectors and uranium from the country to American investment.
“It’s not a bailout at all. No money is being transferred. The Exchange Stabilization Fund has never lost money and it won’t lose money now. I worked in the investment industry, mainly in currencies, for 40 years. You’re supposed to buy low and sell high. And the Argentine peso is undervalued“, Explicou better.
Distance from China will also be one of Washington’s demands on Milei. “Milei did the right things. He arrived to break 100 years of negative cycles in Argentina. He is also a great ally of the United States. He is committed to taking China out of your country. They are everywhere in Latin America”, guarantees the North American secretary.
The measure also has political implications before midterm elections in Argentinaon October 26, which could determine the strength of Milei’s reform agenda. Analysts anticipate that the intervention could increase investor confidence, but warned that the public reaction to the austerity measures could still harm Milei’s party at the polls.
Milei thanked Trump and Bessent, describing the US and Argentina as “the closest allies” and promising to seek a “hemisphere of economic freedom and prosperity.”
