Argentine peso suffers another drop, and US support is seen as insufficient.

247 - The devaluation of the Argentine peso continues to worry the population and financial analysts, who do not believe that the attempts by the United States government to prevent an even sharper fall in the local currency will be effective. Although the US Treasury Secretary, Scott Bessent, has adopted measures to contain the devaluation—such as buying pesos and attempting to justify the currency as "undervalued"—confidence in the actions of the US government is increasingly shaken. With the imminent holding of legislative elections on October 26, many Argentinians are betting that President Javier Milei will be forced to allow the currency to plummet even further after the election.

In an interview with BloombergEzequiel Asensio, portfolio manager at Valiant Asset Management, who has been trading in Argentina for over 30 years, criticized the effectiveness of the US government's interventions: “Bessent's announcements have diminishing marginal returns: each one lasts less and less.” Asensio argues that, even with the flow of dollars sent by the United States, the market simply doesn't believe that the secretary's actions can stabilize the currency. The devaluation of the peso continued even after Bessent's first wave of support, recorded in September, and the currency has lost value against the dollar almost daily since then.

Another factor exacerbating the Argentine currency crisis is the growing demand for dollars in the country. According to market estimates, Argentinians are buying around 300 million dollars a day, reflecting a capital flight that seems to have no end. The lack of confidence in the policies of the Milei government, coupled with worsening inflation—which has exceeded 12% since April—fuels aversion to the local currency. The rise in short-term interest rates, which have reached as high as 157%, also contributes to the destabilization of the economy, increasing uncertainty and hindering access to credit for businesses and citizens.

The US financial intervention, with a bailout package of up to $40 billion, has been seen as a palliative measure for the crisis. However, experts like Lucio Arrocha, strategist at StoneX, are skeptical about the effectiveness of the measure: “Depreciation is inevitable. The only question is what the scale of the damage will be if an electoral defeat for Milei intensifies capital flight.” The situation is compared by some analysts to the UK crisis of 1992, when George Soros bet against the pound sterling and obtained a return of about $1 billion.

Amid this scenario, Javier Timerman, managing partner of AdCap Grupo Financiero, sees Bessent's attempts to hold the peso as a repetition of a historical mistake. "All Argentinians, investors and analysts, believe that the exchange rate needs to be adjusted, and that there will be no economic activity while the rates and the exchange rate remain at these levels," Timerman stated.

Although the Argentine government has managed to roll over part of its domestic debt, the impact of the US Treasury measures is limited. The reduction in the country's foreign exchange reserves and the increase in interest rates result in a scenario of high economic pressure, which raises doubts about the sustainability of the interventions in the long term. Miguel Kiguel, former Secretary of Finance of Argentina, is emphatic: “This cannot continue for much longer. People still believe that the intervention will last until the elections, but after that nobody knows what will happen.”