Argentina's Milei Considers Dollarization Amid Peso Collapse and US Treasury Support

Argentina is experiencing significant economic challenges, including a depreciating peso and high inflation, which President Javier Milei is addressing with aggressive reforms and the consideration of dollarizing the economy. The U.S. Treasury, led by Secretary Scott Bessent, has pledged financial support using the Exchange Stabilization Fund to stabilize Argentina's currency and government standing ahead of legislative elections, reflecting a close relationship between Milei and U.S. President Donald Trump. Experts emphasize that while dollarization could reduce inflation and attract investment, it also risks monetary sovereignty and ties Argentina's economy to U.S. Federal Reserve policies. Milei insists that any move toward dollarization would require direct public approval through a vote. Despite previous hyperinflation, Argentina's inflation rate has dramatically decreased following Milei's austerity measures, though economic fundamentals remain fragile, and the sustainability of these reforms is uncertain. The Wall Street Journal and other analysts suggest that reviving dollarization could be a strategic step to secure U.S. support and stabilize Argentina's economy further.