U.S. Bets $40 Billion on Argentina's Economic Reforms as Peso Rallies and Poverty Rises

Trump Applauds Milei's Overwhelming Win in Argentina as Peso Strengthens Against Dollar

Javier Milei's political group, La Libertad Avanza, achieved a sweeping triumph in Argentina's midterm elections, earning commendation from former U.S. President Donald Trump, who suggested the result could benefit the U.S. financially. Following the election, the peso, which had recently reached historic lows due to economic instability, jumped more than 6% against the dollar on Monday, and Argentine equities and bonds saw significant gains, according to a

. Trump hailed the outcome as a "major victory," asserting it had generated substantial profits for the United States.

Earlier in the month, the U.S. Treasury stepped in to help stabilize Argentina’s currency, selling dollars through

to maintain the peso within its target range, . Before the election, the peso had depreciated by 30% against the dollar in 2025, driven by political instability and shrinking foreign reserves, . Treasury Secretary Scott Bessent described the $20 billion currency swap with Argentina’s central bank as a “step toward economic improvement,” though some critics doubted whether the U.S. would recover its funds, .

With 41% of the popular vote, Milei’s win bolstered his mandate to pursue austerity measures, such as reducing government ministries and cutting public expenditures,

. However, these reforms have exacerbated poverty, with 53% of Argentines living below the poverty line as of 2024. The U.S. has committed an extra $20 billion in private investment, dependent on Milei’s continued political momentum.

The election result sparked a rally in financial markets. Argentine dollar-denominated bonds approached record highs, and the Merval index jumped by 22%. Investors interpreted the victory as a sign of ongoing U.S. backing, with JPMorgan analysts stating it “stops the recent peso decline.” Still, obstacles remain: Milei must build coalitions in Congress to enact reforms, and the peso’s recovery could be short-term if inflation and debt problems persist, as

.

Trump’s support for Milei is consistent with his “America First” policy, emphasizing U.S. financial interests over humanitarian issues in Argentina. Detractors, including economist Joseph Brusuelas, cautioned that previous U.S. rescue efforts failed when political backing faded, and warned the peso could drop by 15%-30% if Milei’s reforms falter. Meanwhile, Milei is under investigation for corruption, including allegations of embezzlement by his sister and a contentious decree allowing U.S. military access to Argentine facilities.

The U.S. Treasury’s actions have received mixed feedback. While the intervention briefly stabilized the peso, the currency is still considered overvalued, and fundamental challenges such as high inflation and joblessness remain. Goldman Sachs analysts remarked that Milei’s “decisive and impressive showing” in the election may boost investor optimism, but sustained progress depends on fiscal responsibility and stable governance.

As Argentina’s economy wavers between crisis and cautious hope, the United States continues to play a pivotal role. Trump’s conditional backing highlights the risks: a successful Milei administration could draw in foreign capital, but renewed economic turmoil could mean further losses for the U.S.

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