Bessent Promises to Rescue Argentina. Will His Hedge-Fund Days Haunt Him?

Argentina is in a currency crisis. Above, Argentine peso banknotes. (Tomas Cuesta/Bloomberg)

The U.S. is prepared to intervene in Argentina’s currency crisis, Treasury Secretary Scott Bessent said Monday.

“All options for stabilization are on the table,” Bessent said on X.

Argentina faces mounting concern worldwide that it can repay $20 billion in loans from International Monetary Fund this spring.

And the government expects pressure to spend on social programs if President Javier Milei, an archconservative committed to austerity and free-market principles, loses big in legislative elections in late October.

The Treasury secretary has traveled to Argentina to show the administration’s strong support for Milei.

For Bessent, the Argentine crisis is significant personally. He bought up distressed Argentine debt as an investor and worked with Mauricio Macri, who served as Argentina’s president from 2015 to 2019, to manage its new debt issuance.

Now, rather than fighting government intervention in currency markets, Bessent is advocating for it. He and President Donald Trump plan to meet with Milei on Tuesday in New York, on the sidelines of the U.N. General Assembly.

Bessent’s announcement that the U.S. may intervene has already helped stabilize the peso, Argentina’s currency. But analysts warn the intervention may not be enough.

“Argentina’s underlying problem is external imbalance and a weaker currency is part of the solution, but it will also likely fuel inflation,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets.

Argentina has sold $1.1 billion from its reserves to prevent the weakening of the currency as it reached the upper end of a trading band.

“Giving Argentina more money might delay the adjustment—making it more costly when it does recognize the necessity,” Chandler said.

Treasury officials didn’t immediately answer requests for comment.

But Bessent may have the IMF as back-up should the U.S. moves to intervene. His chief of staff, Dan Katz, is scheduled to join the International Monetary Fund as its No. 2 official in early October.

The IMF is the traditional lender of last resort for countries with currency problems. The U.S. has intervened in currencies before, too, including in Mexico in 1994.

The risk for Bessent is that additional funds may simply prompt currency traders to keep fighting, much as he did in his hedge-fund days. IMF lending is often conditional, based on economic reforms aimed at addressing the underlying problem. It isn’t clear whether the Treasury Department would ask for similar conditions.

Bessent explained his philosophy before joining the Trump administration.

“I would say that a huge amount of the money I’ve made has been, people driving a car 90 miles an hour at a brick wall will put on the brakes,” he said in an interview.

“Occasionally they don’t, and you’re in the car with them, right?”

Associate Editor Reshma Kapadia contributed to this article.

Write to Matt Peterson at matt.peterson@dowjones.com