Is Scott Bessent the big winner of Argentina’s legislative elections?

U.S. Treasury Secretary Scott Bessent's "master class" in economic support to for Argentine President Javier Milei helped lead to Milei's victory in Argentina's crucial midterm legislative elections. 

In that vein, Treasury Secretary Scott Bessent, with a support package that included more than $20 billion in currency swaps and purchases of pesos, not only helped stabilize the economy of a key ally of the President Donald Trump but generated estimated gains of at least 10% for the U.S. Treasury in a matter of days.

How did it go?

The Argentine peso faced a 21% depreciation over four months, driven by market doubts about the government’s progress on fiscal austerity and pro-market reforms, which have sharply reduced inflation but left international reserves below IMF targets.

U.S. intervention: Bessent's "master class"

Facing the risk of "acute illiquidity," the Treasury activated the Exchange Stabilization Fund (ESF), a $211 billion reserve-backed mechanism for direct invention. 

The package intensified in October.Market estimates indicate the U.S. invested more than $1 Billion in peso purchases, peaking on Oct. 22 when banks such as JPMorgan, Chase & Co. and Citigroup Inc. sold between $400 million and $500 million on behalf of the Treasury, breaking a five-day losing steak for the local currency.

On October 21, the Argentine central bank reported sales of $45.5 million to complement the operation.

In parallel, a $20 billion swap was signed with the Central Bank of Argentina, allowing the exchange of pesos for dollars to inject liquidity. Bessent announced another $20 billion would be organized through private banks and sovereign funds.

The impact on the markets was immediate

The peso appreciated nearly 2% in key sessions following the Treasury purchases, marking a 10% weekly rebound that eased investor panic and helped Milei secure a legislative election win.

Sovereign bonds, including the 2035 issue, rose 4.5 cents to 60.5 cents on the dollar, while the Merval index rebounded 5.3%.

Win-win

By buying "cheap" pesos (when the exchange rate hovered around $1,424 per dollar) and seeing them strengthen (to $1,378), the ESF captured implicit gains of 10% in its holdings, which are reversed in the swap with no net risk to taxpayers.

In that context, Bessent said in an NBC interview, “there will be no taxpayer losses. This is a swap line. This is not a bailout, and it is from the Exchange Stabilization Fund, which Treasury – I control at Treasury. It has never registered a loss. It is not going to register a loss.” He defended the decision to support Argentina as a “critical mission” for hemispheric stability, not an electoral bailout.

President Donald Trump was blunt on the matter, saying U.S. support depended on Milei’s success in the elections and adding, "If he loses, we are not going to be generous with Argentina."