The United States launches a financial bailout for Argentina, and the Treasury buys pesos

Treasury Secretary Scott Becent said on social media that Washington has finalized a $20 billion currency swap framework with Argentina’s central bank. mail. The United States also purchased pesos directly, he said, a move that followed failed efforts by Argentine authorities to stabilize the exchange rate on its own.

Trump and Picent make bet On a nation that has repeatedly defaulted and devalued over the past several decades. The goal is to help their political ally, President Javier Miley, achieve victory in the midterm elections that will be held on October 26 and calm markets troubled by fears that his leftist rivals will return to power.

“The US Treasury is prepared, immediately, to take any extraordinary measures required to provide stability to the markets,” Besant said.

Miley welcomed the intervention and thanked Besant and President Donald Trump in a statement mail on X. “Together, as our closest allies, we will create a hemisphere of economic freedom and prosperity,” he said.

The problem of “illiquidity”.

Besant described Argentina’s problems as a “moment of acute illiquidity,” suggesting he does not see a fundamental problem with its ability to repay its debts. It is not immediately clear what the United States is asking Argentina for its assistance. Miley denied that the United States asked Argentina to dispose of a separate $18 billion swap line with China.

While speculation rose ahead of Picente’s announcement that the US might pressure Argentina to allow the peso to float freely, the Treasury Secretary said the country’s “exchange rate range remains fit for purpose.”

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“Argentina’s policies are sound when they are based on fiscal discipline,” Picent said. He also said he discussed potential investment incentives for U.S. companies that might want to do business in Argentina.

Argentina’s dollar bonds jumped across the curve, with some of the country’s most liquid banknotes rising more than 4 cents on the dollar to reach session highs. The peso, which started the day down 2.7% as local authorities remained out of the market for the first time in more than a week, ended up 0.7% against the dollar.

The summit is coming

Trump and Milley are scheduled to meet at the White House on October 14 for their second meeting, after they held talks on the sidelines of the United Nations General Assembly in New York in September.

The announcements come after several days of US discussions with the Argentine economic team, including Economy Minister Luis Caputo, who also met this week with International Monetary Fund Director-General Kristalina Georgieva. Argentina is the Fund’s largest debtor ever, owing about $55 billion after a series of bailouts.

The new bilateral “swap” will likely be different from the swap lines the Fed applies with other central banks in advanced economies, and more reminiscent of the tools Washington used to bail out Mexico three decades ago.

Although US aid may help stabilize Argentina’s volatile markets for the time being, it is already being questioned on both sides of the aisle in Washington for being inconsistent with Trump’s “America First” agenda.

For his part, Miley repeatedly said that government is not the solution while wielding a chainsaw to symbolize federal spending cuts in Argentina. After promising to close its central bank during his election campaign two years ago, the currency swap line now runs through it.

Trump’s financial lifeline to Milley comes in addition to US support for a separate $20 billion agreement in April for Argentina with the International Monetary Fund. This was the third rescue plan for Argentina from the Fund since Trump’s first term.

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