U.S. Treasury's Bessent says all options for stabilizing Argentina are considered

U.S. Treasury's Bessent says all options for stabilizing Argentina are considered

In recent weeks, Argentina's economic situation has been a subject of intense scrutiny, with the country grappling with a collapsing peso and mounting debt. Amidst this turmoil, U.S. Treasury Secretary Scott Bessent has indicated that all options for stabilizing Argentina are under consideration.

President Javier Milei's government has been working to meet a $9.5 billion debt payment due in 2026, but has been cautious about relying on U.S. intervention. Milei's administration has been tight-lipped about negotiations with Washington, but local media has interpreted his statements as a sign that quiet conversations are ongoing .

Bessent, who visited Buenos Aires in April, had previously mentioned that the U.S. could tap into its Exchange Stabilization Fund to support Argentina. However, no official confirmation has been made since then. The Treasury's silence has left investors and analysts speculating about the potential U.S. role in Argentina's economic stabilization.

Argentina's peso has been in freefall, with the currency hitting 1,475 per dollar this week. The central bank has been pouring millions into the market to defend the currency, but the intervention efforts have not been enough to stem the bleeding. The peso has breached the top end of its IMF-imposed trading band, prompting the government to introduce tighter trading controls .

The economic crisis has been compounded by the country's dollar bonds and stock index performing poorly. The S&P Merval index has become the worst performer among over 90 global stock benchmarks tracked by Bloomberg this month. Argentine dollar bonds, particularly those due in 2035, have led emerging market losses, with yields jumping from 10.27% at the start of September to over 17% .

President Milei's popularity has taken a hit following his government's austerity measures and a corruption scandal. His government's inability to pass further reforms has raised concerns about its ability to manage the economic crisis.

Despite the challenges, Argentina's economy minister, Luis Caputo, has expressed confidence in the government's program and its ability to meet debt obligations. However, the ongoing intervention efforts to stabilize the peso have been eating into the country's ability to service its debt .

As Argentina continues to navigate its economic crisis, the potential involvement of the U.S. Treasury remains a key factor. Bessent's statement that all options are being considered suggests a willingness to explore various strategies to stabilize the Argentine economy. However, the lack of official confirmation from both the U.S. and Argentine governments has left investors and analysts in a state of uncertainty.