As a top investor for the liberal philanthropist George Soros in the 1990s, Scott Bessent made a splash for a $10 billion bet that the British pound was overvalued. That wager helped “break” the Bank of England with devastating trades against the pound. In 2013, Mr. Bessent netted $1 billion for Mr. Soros’s fund with a giant bet against the Japanese yen.
Now, in an unconventional move with little precedent, Mr. Bessent is staking his credibility as President Trump’s Treasury secretary — and billions of taxpayer dollars — on another type of currency bet.
Mr. Bessent, a former hedge fund manager, is orchestrating a $20 billion lifeline to prop up the Argentine peso, which has been declining in value. The backstop is intended to support Argentina’s economy and its president, Javier Milei.
On Friday, Mr. Bessent said the Treasury Department had intervened for at least a second time to buy pesos.
“Treasury remains in close communication with Argentina’s economic team as they work to Make Argentina Great Again,” he wrote on social media on Friday. “Treasury is monitoring all markets, and we have the capacity to act with flexibility and with force to stabilize Argentina.”
On the sidelines of the annual meetings of the International Monetary Fund and the World Bank this week, Mr. Bessent toyed with an additional $20 billion in financing for the beleaguered country, on top of a $20 billion infusion in the form of a currency swap with its central bank.
At the center of his bet is that the currency of Argentina — a debt-ridden country whose economy has required more than 20 bailouts — is undervalued. If he is right, the United States could make money by acquiring pesos that will eventually be worth more and by gaining access on favorable terms to Argentina’s natural resources. If he is wrong, the United States could wind up subsidizing yet another failed bailout for a country that has defaulted nine times.
It is highly unusual for the United States to directly intervene in another country’s economy. Although it did rescue Mexico in 1995, historically it involves other nations or institutions such as the I.M.F. to share the burden of risk.
The outcome carries steep political consequences for both Mr. Bessent and Mr. Trump. The president is already facing criticism for bailing out Argentina at a time when American farmers are struggling as a result of his trade war with China and federal workers are going without pay during a government shutdown.
“They’re putting their reputation on the line, especially Bessent’s reputation,” said Martin Mühleisen, a former I.M.F. official who is now a fellow at the Atlantic Council. If the United States ended up losing money, “they would have a lot of egg on their face,” he said.
The lifeline that Mr. Bessent has orchestrated involves what is known as a central bank currency swap. It is essentially a loan that the United States is providing through Treasury to Argentina’s central bank, which has been forced to sell its holdings of U.S. dollars in recent months as it seeks to support the declining value of its currency. Mr. Bessent is using a bucket of money that the Treasury Department controls, known as the Exchange Stabilization Fund, to buy pesos. He said previously that he was prepared, if necessary, to provide Argentina with a line of credit and to buy government bonds.
The peso has plunged on fears that Mr. Milei’s political fortunes are fading and that the economic reforms he is pursuing could be derailed if his party does poorly in midterm elections this month.
The United States has pledged to back Argentina’s economy, but the Trump administration has remained vague about the specifics of how those interventions will work and what is being done to protect taxpayers from losses. Brad W. Setser, a former Treasury official who is now a senior fellow at the Council on Foreign Relations, said spending that money on Argentina was “pretty much the most risky use imaginable of the Exchange Stabilization Fund.”
The fund holds dollars, foreign currency and I.M.F. assets that the United States controls. The Treasury secretary has broad discretion over how the funds are deployed, but they are traditionally used to help stabilize economies that are facing crises or default, primarily through loans or currency purchases. As of late August, the fund had a net balance of about $43 billion.
So far, no details or conditions related to the central bank loan have been made public. Santiago Bausili, the president of Argentina’s central bank, said this week that he hoped the U.S. currency swap plan would be activated before elections on Oct. 26. Speaking at an Atlantic Council event, he declined to say what kinds of assets would comprise Argentina’s side of the swap nor what the United States was seeking in return.
U.S. officials have been pushing Argentina for access to its uranium and lithium supplies and for it to scale back its ties to China, according to a person familiar with the talks. Mr. Trump said this week that a free-trade agreement between the two countries was also a possibility. The Treasury Department did not respond to a request for comment.
However, Argentina’s history of economic crises has raised concerns that the United States could ultimately end up losing money if Argentina’s economy does not stabilize and if the value of the peso continues to fall. The country has received more than 20 economic support packages from the I.M.F. since the 1950s. Of the monetary fund’s roughly $164 billion in support outstanding to countries around the world, Argentina accounts for about 35 percent.
That checkered history has not deterred foreign investors, who until Mr. Milei’s recent drubbing in local elections last month had appeared optimistic that their bets on Argentina would finally pay off.
“Argentina is the gift that keeps on giving,” said Douglas A. Rediker, a managing partner of the political advisory firm International Capital Strategies. “It is unbelievably predictable in its cyclicality over the past decades, and there is always a new crop of investors and traders who think they know better.”
Mr. Trump made clear this week that U.S. support was contingent on Mr. Milei’s party doing well in the elections. Otherwise, the president said, the United States would not “waste our time.”
But if Mr. Milei prevails, there are likely to be many more questions on what the United States will demand in return to ensure that it is ultimately paid back.
Although Mr. Milei has won international praise for his economic agenda, analysts have argued that he has mishandled Argentina’s currency. They contend that for the peso to stabilize in the long run it should be allowed to “float” freely, and that without such a policy change the infusion of U.S. funds could be wasted.
“Were the United States to offer Argentina a longer-term support package to back an unsustainable exchange rate, that would be a major folly and waste of U.S. taxpayer resources,” said Mark Sobel, a former Treasury official.
Without requiring Argentina to move toward a more market-based system, the fear is that it will continue to burn through any available cash reserves to keep the peso within a certain range. That is likely to mean the government will not have enough available funds to pay its debts next year, leading to another cash crunch.
But no such plan has been enacted. In fact, Mr. Bausili of the central bank said this week that Argentina intended to maintain its policy of allowing the peso to move within a specific range.
According to Alejandro Werner, who previously ran the Western Hemisphere department at the I.M.F., a freely floating peso is a necessary condition but not the only change required for Argentina’s financial situation to stabilize. He also urged the country’s central bank to adopt a “more normal” approach to monetary policy that involved inflation targeting while also cutting back further on fiscal expenditures.
“You want your allies to be able to stand on their own two feet after you support them, and that is where conditionality comes in,” Mr. Werner said. “So far, we haven’t seen it.”
Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, likened the Trump administration’s decision to help Argentina as a “Catch-22 situation” for both countries.
“If the U.S. stops providing dollars to the country, it is unlikely that they will be repaid, and Argentines will suffer,” she said. “If the U.S. decides to help Argentina regardless, it still faces the likelihood of nonpayment or endless arrears, while Argentina flounders with its unsustainable currency regime.”
Mr. Bessent, who has steered the plan from the start, is instead wagering that the United States could turn a profit on this Argentina bet and that keeping the country’s resources from China is strategically important.
If the wager is successful, Isabelle Mateos y Lago, who previously worked at the I.M.F. and is now the chief economist at BNP Paribas, said it could become a new way for the United States to offer economic support to its allies outside traditional avenues like the I.M.F., which ties loans to specific reform goals. Eschewing that safeguard though was a “big risk for U.S. taxpayers,” she said.
If Argentina becomes an economic quagmire, however, Mr. Bessent may shoulder much of the blame.
“You generally don’t want your first use of the E.S.F. to be a failure,” Mr. Setser said, referring to the Exchange Stabilization Fund. “I do think it would impact the broader credibility of Secretary Bessent’s financial management.”
Alan Rappeport is an economic policy reporter for The Times, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters.
Colby Smith covers the Federal Reserve and the U.S. economy for The Times.
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