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US Treasury Sells Dollars to Keep Peso Within Argentina FX Band
- Jtsummers 1y agohttps://archive.is/csR4m https://archive.is/csR4m
- lawlessone 1y agoDevaluing your currency to help another country? I don't think I've ever heard of a country doing anything like this for another country?
- ninininino 1y agoIt works well when you already want to devalue your currency to improve the competitiveness of your exports (impact on non-diversified consumer's purchasing power and wealth debasement be damned)
- fuzzfactor 1y ago>US Treasury Sells Dollars Nothing to see here. They've got plenty. Plus they'll print more.
- rchaud 1y ago$20 billion isn't going to make a dent in the value of the USD. Buying pesos doesn't make the dollar any cheaper for major trading partners like Canada, China or the EU. This is a bailout of Argentina's collapsing currency peg instituted by its "free market libertarian" government.
- londons_explore 1y agoIt's literally a loan to Argentina to support the friendly government there and the US's existing interests in pesos. 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.
- rchaud 1y agoMy comment was in response to the parent which hypothesized that this was done to devalue the dollar to make US exports cheaper.
- Fade_Dance 1y agoFX necessarily trades in pairs. To buy a peso one needs to sell something against it, and the US will sell dollars if acting in the FX space. 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).
- bigbadfeline 1y ago> raising the peso/dollar cross is effectively strengthening the currency against all other currencies. 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.
- sdwr 1y agoRight, and the US (presumably) has the mass and stability to weather that impact much better than Argentina does.
- vocram 1y agoSwitzerland did that for a few years in 2011, not to help another country but to avoid CHF overvaluation.
- lawlessone 1y agoYes, and China allegedly does similar, but in both cases it's to help themselves.
- mindslight 1y agoOne of the butchers in the Trump regime wrote a book on how we need to devalue USD so we can go back to being competitive making shoes and all the other sort of unskilled factory jobs China did before they developed. So I guess one could consider this in "our" interest as well.
- quamserena 1y agoTrying to revert a service-based economy into a manufacturing-based one is an incredibly stupid idea and there is no way this doesn’t blow up in our face. Devaluation of the dollar threatens our reserve currency status, yield rates, and will cause rapid inflation, all to chase some pipe dream that Joe the Factory Worker and his family will be able to live a middle-class life again on a single salary. In actuality, cash will flow into equities, the rich will benefit and the average American will suffer the consequences of their vote.
- throw03172019 1y agoDoes Argentina have a non-redacted version of the Epstein files or something?
- slaw 1y agoIt is even worse. Argentina can ask China for help.
- igor47 1y agoThere's no way the administration in power thinks that's worse.
- Yeul 1y agoTricky. Yes you'd think that playing China and America against eachother would be a smart move. 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.
- trallnag 1y ago[flagged]
- amanaplanacanal 1y agoIs propping up a failing currency normally considered "development aid"?
- trallnag 1y agoYes, of course. Argentina is undergoing a huge restructuring. I don't understand why development aid should be limited to the poorest countries only.
- whycome 1y agoAlly for future war w/ venezuela?
- erentz 1y ago> Treasury’s efforts to shore up Argentina’s currency are part of a broader effort by Secretary Scott Bessent to stabilize the South American economy before President Javier Milei’s party faces midterm elections Sunday 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?
- cyanydeez 1y ago[flagged]
- Fluorescence 1y agoDidn't Argentina also take 20 billion from the IMF earlier this year?
- ChrisArchitect 1y agoRelated: Argentine peso weakens to fresh low despite US interventions https://news.ycombinator.com/item?id=45651516 https://news.ycombinator.com/item?id=45651516 U.S. Banks Are Hunting for Collateral to Back $20B Argentina Bailout https://news.ycombinator.com/item?id=45651516 https://news.ycombinator.com/item?id=45651516
- Havoc 1y agoIs the US having a stroke?
- mindslight 1y agoNo, it's an assisted suicide.
- ahurmazda 1y agoThis was on nytimes just a few days ago. Quoting the bits that might be relevant[1]. A lot more in tfa > 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. 1. https://archive.ph/6bWMv https://archive.ph/6bWMv
- metalman 1y agothis has nothing to do with helping the population of Argentina as all of the money is leaving the country it is the bizare case of the US subsidising the ongoing takeover of Argentinas economy by outside actors