US Treasury Sells Dollars to Keep Peso Within Argentina FX Band
bloomberg.com
bloomberg.com
Things like this used to be the job of the IMF, stepping in when there were genuine crisis, in theory with experts advising or demanding policy changes to prevent further crisis.
But it seems the crisis here is all self inflicted and the bail out is politically motivated. Is the expectation that after Sunday this won’t be needed and things will stabilized or is this structural and we’ll be on the hook holding the Peso’s peg forever?
> Those efforts have been complicated by the fact that major hedge funds, including those led by friends of Mr. Bessent, stand to benefit financially from an Argentina economic lifeline. Funds at investment firms including BlackRock, Fidelity and Pimco are heavily invested in Argentina, as are investors such as Stanley Druckenmiller and Robert Citrone, both of whom worked with Mr. Bessent when he was an investor for George Soros.
I don't think I've ever heard of a country doing anything like this for another country?
Since the USD is one of the core currency crosses and is at the base layer of the financial system, raising the peso/dollar cross is effectively strengthening the currency against all other currencies.
Also, while the specific political circumstances around the pesos swap line are dubious, the US often extends dollar swap lines to other central banks. The other side of the privilege of having the world reserve currency is having the obligation to support the stability of the world financial system (although this example is more off the wall than the typical example).
If the peso rises against all other currencies, the dollar paying for it must fall against them, not as much but the dollar falls - at least relative to the movement it would experience without the purchase of pesos.
> Since the USD is one of the core currency crosses and is at the base layer of the financial system,
Abracadabra isn't an argument.
Nothing to see here.
They've got plenty.
Plus they'll print more.
If we didn't do it, the peso would probably hyperinflate again and all our investments denominated in pesos would become worthless.
If we do do it, we get back all our money as long as the currency doesn't collapse in the future.
In actuality, cash will flow into equities, the rich will benefit and the average American will suffer the consequences of their vote.
Argentine peso weakens to fresh low despite US interventions
https://news.ycombinator.com/item?id=45651516
U.S. Banks Are Hunting for Collateral to Back $20B Argentina Bailout
it is the bizare case of the US subsidising the ongoing takeover of Argentinas economy by outside actors
But Americans have a proven track record of killing South American leaders and invading their countries.
Perhaps one day, god willing, the Chinese will be in a position to send aircraft carriers to Panama.