The US just committed roughly $20 billion in a currency-swap with Argentina. That’s a whole lot of pesos. So, why did the US extend this lifeline, and will it save Argentina from itself?
The currency swap can buy Argentina some time by backstopping the peso. However, given the fundamentally flawed economic and political situation in Argentina (and the track record of defaults and currency collapses), this swap is just a band-aid.
The US is taking on a whole lot of risk, and I’m not seeing the upside here. Unless Argentina attracts real investment, undergoes massive reforms, and uses those God-given resources to their full potential…the US is just betting on a losing horse.
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