Can Trump save the afflicted economy in Argentina as he hopes? | Business and Economics News

After a meeting on Tuesday on the sidelines of the United Nations General Assembly (UNGA) in New York, US President Donald Trump described his Argentine counterpart, Javier Miley, as a “truly great leader.”

He told reporters: “I do something that I don’t do so much … I give his full support for him.” The next day, US Treasury Secretary Scott Payett said that he “works in close coordination with President Millie and will be” doing what is necessary “to support the Economy of Argentina.

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Pesin’s pledge came after the prices of Argentine bonds decreased sharply last week, as investors saw the country’s central bank quickly through his foreign reserves to defend the delusional peaso.

On Tuesday of this week, the currency fell by more than 6 percent – the largest decrease within one day since September 8, forcing the government to sell more dollars in the immediate market to support it.

Millie won the external of Maverick, who won a sudden victory in the elections in 2023 by promising to tame the fleeing inflation and strengthening stability. Trump – a liberal ally – described Miley as “his favorite president.”

But can Trump and manage to save the Argentine economy? How are they appointed about this task?

How does Miley enter the economy?

With disappointment due to contracts of financial crises, Argentine voters elected Mili as their president in November 2023. The extreme right-wing liberation promised a dose of painful shock therapy-that is, by reducing government spending to reduce financial uprisings and inflation.

Milli electoral success had been fed by years of economic frustration. With the presence of four out of 10 Argentine who lived in poverty when it was elected, the economy was heading towards its sixth recession during a decade. The inflation, a major concern for the voters, was in triple numbers.

He has The first few weeks in the officeMilei reduced the state’s fuel subsidies, cut public salaries and reduced the number of government ministries by half. With a decrease in the monthly deficit, as well as pressure on the central bank in Argentina to print money to cover the spending, which in turn was increasing inflation.

The result was that the main inflation decreased from 211 percent when Miley took office to 37 percent last month. However, economic activity stopped, higher interest rates decreased (as defined by the Central Bank) and other growth implementation policies aimed at reducing inflation.

So far this year, stagnant wages and high unemployment have led to the disappointment of some voters, and the president’s approval ratings decreased from 48 percent in July to 41 percent in mid -September, according to Tsbeltosro.

Millie has also suffered from many political setbacks, including a Defeat in regional electionsCorruption A scandal on medical contracts associated with his sisterAnd a loss in Congress, which canceled the veto in order to restore funding for health and education.

Why is the Argentine peaso in trouble?

Since April, when I launched the International Monetary Fund (IMF) Program 23 In Argentina, the bizo was floating in the scope of the exchange rate, which puts an end to the amount of what could rise or decrease against the US dollar.

However, with concern that the last setbacks have indicated to the extent to support the popular Miley, currency traders began selling the bizo.

By mid -September, the official Bizo rate decreased by almost 10 percent and began testing the upper limits of the stock exchange. It was briefly over the upper limits on September 17, and reached 1475 to the dollar.

By September 19, the Argentine Central Bank spent $ 1 billion of foreign currencies – cash reserves for foreign currency used to maintain the stability of the currency – to maintain the bizo under the roof of the currency. If it rises above, the inflation may start to rise again.

Looking at the future, Argentina will have to find $ 10 billion to finance debt payments to the International Monetary Fund in the first half of 2026. Simply put, the bank does not have financial ammunition to maintain its support for the bibzo for a long time. It is the place where our support comes.

What is Washington?

US Treasury Secretary Bessint promised a “great” intervention to help stabilize the volatile currency of Argentina. His announcement on Wednesday at the beginning helped Quiet financial markets.

The US Treasury Department is considering purchasing the Argentine government bonds in addition to the progress of a $ 20 billion credit line or loan. Bessint said other options to help Buenos Aires include bodies of the central bank currency and the purchase of debts denominated in dollars.

The goal is to provide Milli with some breathing rooms before mid -time elections in October.

In a post on X, Milei thanked both Bessent and Trump for their “unconditional support”. “Those who defend freedom ideas must work together for the welfare of our peoples,” Millie said.

His weight is contrary to the besieged leader of Argentina A severe tariff Trump, who was imposed on Brazil-whose boss, Luiz Inosio Lula da Silva, is a left-wing leader in July.

How did the markets respond to the news?

Last Wednesday, the day after the Trump meeting with Miley, the financial markets were initially supported by Bessent’s comments. The Argentine value due in 2029 increased by 6 cents to reach 71 cents on the dollar. Elsewhere, the bizo rose by almost 4 percent while local stock markets rose.

According to Andres Abadia, the chief economist in Latin America in the total economy, Besseon’s comments led to a comprehensive improvement in the country’s financial indicators. The news has been positively received in Argentina. “

Abadia Al -Jazeera told that this step “strengthened the international reserve position of the Central Bank, giving it a greater room for maneuver in foreign exchange markets.”

He said: “Argentina’s risks slightly reduced the failure to pay (which led to the reduction of financing considerations.”

However, after a week of relative stability, the Biso decreased again by 6 percent during the day on Tuesday of this week, fueled by political and economic uncertainty. The government interfered by selling US dollar reserves, which was trying to rebuild, and closed the Bizo 1.4 percent less at 1,380 peso per dollar.

Therefore, can the Trump administration save the Argentine economy?

If Washington has made Milei Financial Relief, it will be a second major rescue plan for Argentina during the Trump era. In 2018, the International Monetary Fund paid approval of a $ 50 billion loan to the then president (and the political animal) Mauricio Macri, in a deal that was later unveiled.

At the beginning of this month, the possibility was to be more forcing the government to allow the bibzo value. Experts say that the possibility of helping the United States appears to be only scheduled to postpone the reduction of the value of the currency unless after the mid -term elections, experts say. In fact, Bessent described help as a “election bridge”.

Millie will look forward to strengthening the presence of his party in the Congress in the ballot box on October 26. But even if he kept the Libertad Lewanza party seats, many suspect that he will have to change his exchange rate plan to allow pyseo to float more freely.

For Abadia, US financial support “bought time for Milei. It is a lifeline, but not the healing medicine.” He added that in the short term, “the risk of inflation is in the upward direction … if the following is a bad performance in October, then the negative political and financial noise will hurry.”

“This will be a dark scenario for Millennium,” Abadia said.