USD/ARS: Here’s why the Argentine peso has crashed despite Trump bailout

The Argentine peso continued its freefall as traders focused on the upcoming elections in the country and interventions by Donald Trump and his administration. 

The USD/ARS exchange rate was trading at 1,500 for the first time ever. It has now jumped by 45% this year making the peso the worst-performing currency.

Argentina election and US bailout 

The USD/ARS pair has surged in the past few days even as the US government continued its interventions. Data shows that the US Treasury sold dollars through Banco Santander, although the full amount was not made public.

The US has also intervened in other ways, including signing a $20 billion currency swap line and is in talks with American banks to lend a similar amount, a move that many banks are resisting. In a statement, Scott Bessent, the Treasury Secretary, said:

“Argentina now has the opportunity to embrace economic freedom, and our stabilization agreement is a bridge to a better economic future for Argentina, not a bailout.”

The Argentine peso has crashed despite these efforts for three main reasons. First, there is a likelihood that Milei’s party will lose in the upcoming mid-term elections, as it did in a recent one in Buenos Aires. Trump is expected to stop all aid if the party loses, while Milei’s reforms will face heightened scrutiny.

Second, analysts believe that the announced bailout will not be enough as the country needs more dollars in the economy. Analysts believe that the ideal figure should be north of $60 billion.

READ MORE: Explaining Argentina’s market crash and the hard path ahead for its economy

Third, Donald Trump is facing substantial pressure from lawmakers for the bailout. Some of his closest allies, like Marjory Taylor Green, have blasted the measure, especially now that the government shutdown is continuing.