I heard Americans want to buy, while Argentinians are "frantically selling" pesos.

A massive rescue effort from the United States appears to have failed to restore confidence in the Argentine peso among the public, instead sparking a market battle of "you buy, I sell". According to media reports on October 17, U.S. Treasury Secretary Besant has taken action to stop the peso from depreciating, not only directly entering the market to buy pesos and publicly claiming it is "undervalued," but also considering, through private arrangements with international banks, to double the initial $20 billion swap line rescue plan to $40 billion. However, these efforts have not calmed the market's panic. Argentine investors and citizens are convinced that after the October 26 legislative election, President Milei will have no choice but to let the peso fall. The intervention measures supporting the peso have drained liquidity from the financial system, causing short-term interest rates to soar to a staggering 157%, which has dealt a new blow to an already fragile economy and further reinforced market pessimism. To make matters worse, U.S. President Trump’s statement this week shook the last bit of market confidence. He implied that if Milei fails in the election, the United States will withdraw its support. The market interpreted this as an attempt to influence Argentina’s election and raised serious doubts about the sustainability of the U.S. rescue commitment. **A Loss of Market Confidence, Continued Sell-off** Market skepticism is visibly reflected in the peso’s exchange rate trend. Data shows that in the week of September 22, after Besant first promised to help, the peso briefly rebounded, but since September 29, it has depreciated against the dollar almost every trading day. “Besant’s statements are experiencing diminishing marginal effects—every time, the impact lasts shorter than before... The market doesn’t trust Besant, even if he puts in real money,” said Ezequiel Asensio, a portfolio manager at Valiant Asset Management with 30 years of trading experience in Argentina. Capital outflow data supports this distrust. According to Central Bank data, in the five months ending August, Argentines made net purchases of $18 billion, equivalent to about $400 per resident. Market participants estimate that Argentine savers are still buying about $300 million per day. **Devaluation Expectations Under the Shadow of Election** The upcoming legislative election has become the core variable in market pricing. Last month, Milei’s party suffered a major defeat in the Buenos Aires local elections, intensifying concerns that his free-market agenda may be hindered and accelerating the trend of capital fleeing the peso. StoneX strategist Lucio Arrocha believes devaluation is inevitable. He says the only question now is how large the devaluation will be if Milei loses the election and capital flight worsens. “This country doesn’t have enough dollars to cope with the capital outflow that’s about to happen,” he added. Former Argentine Finance Minister Miguel Kiguel expressed a similar view: “This situation won’t last much longer. People still think interventions will continue until the election, but no one knows what will happen afterward.” **The Echo of History and Economic Realities** This currency defense battle reminds some in the market of history. Besant himself worked at George Soros’s hedge fund company in his early years and participated in the famous short-selling of the British pound in 1992, which ended in great success. At the time, Britain was also defending an unsustainable exchange rate and was ultimately forced to give up. Javier Timerman, managing partner at AdCap Grupo Financiero in Buenos Aires, sees that history as a “cautionary tale” for Besant’s current efforts. “All Argentines, investors, and analysts believe Argentina’s exchange rate must adjust,” Timerman said. Economic fundamentals also support the expectation for devaluation. A key reason is that the peso’s exchange rate has failed to adequately reflect the country’s soaring inflation. Although the consumer price index has risen 12% since April, the current exchange rate is still at the same level as the unofficial rate then, making the peso severely overvalued. *Risk Warning and Disclaimer* The market has risks; investment requires caution. This article does not constitute personal investment advice and does not take into account individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are appropriate for their particular circumstances. You invest at your own risk.