On Friday, the Argentine peso slipped 0.4% against the U.S. dollar, which now trades at nearly 1,492 pesos. The exchange rate has already hit a record low and remains below its level before the Trump administration announced a $20 billion currency swap agreement.
While news of that lifeline briefly triggered a sharp rally earlier this month, the peso has since given up those gains and has tumbled by more than 40% against the greenback so far this year. This decline persists despite Argentine President Javier Milei’s efforts to secure an IMF rescue package and defend the peso by draining the country’s foreign-exchange reserves.
The financial turmoil comes as voters have grown disillusioned with Milei’s libertarian economic program, which has attracted praise from Trump and other Republicans. Although Milei has made significant progress in curbing deficits and inflation, Argentina’s economic growth has slowed. Moreover, the country’s so-called crawling peg to the dollar is widely seen as unsustainable.
Recent regional elections dealt Milei a major defeat, increasing the odds that the government will devalue the peso. Congress elections scheduled for this Sunday are expected to further go against his party, adding more pressure on the currency.
Trump has defended his administration’s rescue efforts amid growing pushback from supporters who argue that it doesn’t align with his “Make America Great Again” agenda. “They have no money, they have no anything, they’re fighting so hard to survive,” Trump told reporters aboard Air Force One last weekend.
Meanwhile, Treasury Secretary Scott Bessent has justified aid to Argentina as necessary to prevent a “failed state,” calling the currency swap line “a bridge to a better economic future for Argentina, not a bailout.”
However, U.S. intervention has so far failed to arrest the peso’s slide to fresh record lows, even as market participants report signs that the Treasury Department is selling hundreds of millions of dollars to prop up the currency.
### Wall Street’s Dim View
Wall Street remains skeptical about Argentina’s prospects and the Trump administration’s ability to sustain Milei’s economic reforms. Joseph Brusuelas, chief economist at RSM, wrote in a blog post that the currency intervention has been unsuccessful and predicts a 15%-30% plunge for the peso if voters again reject Milei.
He also noted that the U.S. is trying to arrange additional loans for Argentina from American banks, which reportedly seek collateral or guarantees to ensure repayment. “Given that the Milei government has already exhausted $20 billion in aid from the International Monetary Fund, it is necessary to ask the question: Will the U.S. get paid back?” Brusuelas said.
Brusuelas believes Buenos Aires will likely devalue the peso and possibly default on its debt. He reminded readers that Argentina is a “serial defaulter,” having tried to renegotiate its foreign debt nine times since 1816.
In fact, Argentina faces substantial financial obligations with dollar-denominated debts coming due soon, requiring at least $18 billion in repayments next year.
In a note released Tuesday, Mauricio Monge, senior Latin America economist at Oxford Economics, stated that the U.S. currency lifeline would be most effective if it were front-loaded and delivered immediately. However, it remains unclear if that will happen, especially since Trump has said any further aid would depend on the increasingly unlikely scenario that Milei’s allies win the upcoming elections.
“If history has taught us anything about Argentina, it is that past bailouts, when political support wanes, have proven futile,” Monge added. “As Milei’s approval ratings decline and political support fades, the likelihood of reimposing capital controls and currency depreciation increases, prompting depositors to shift to dollars.”
https://fortune.com/2025/10/25/argentina-bailout-javier-milei-trump-peso-devaluation-default-election/