US finalizes a $20 billion currency swap agreement with Argentina

The United States has finalized a $20 billion currency swap agreement with Argentina in one of the Trump administration’s most direct interventions to stabilize a foreign economy since he returned to the Oval Office.

Treasury Secretary Scott Bessent announced the deal on Thursday after four days of close discussions in Buenos Aires. 

“The US Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” Bessent said in a statement on X. He added that the Treasury had “directly purchased Argentine pesos” as part of the program.

Washington steps in to stabilize Argentina’s collapsing currency

Argentina, led by Trump ally President Javier Milei, has been struggling with currency sell-offs in recent weeks. According to data from TradingEconomics, the Argentine peso weakened beyond 1,400 per USD this week, sliding back toward its record low of 1,475 reached on September 19.

According to Bessent, the peso’s decline and shrinking central bank foreign reserves has left the country in a “moment of acute illiquidity.” The Treasury secretary explained that the swap line would give Argentina immediate access to US dollars in exchange for pesos. 

The two central banks will trade currencies temporarily to help Buenos Aires defend its exchange rate and meet short-term liquidity needs.

Bessent admitted that if the peso’s value weakens during the swap period, it could expose the US to losses. However, the Treasury chief assured policymakers that the USD-Pesos swap was being executed through an Exchange Stabilization Fund that he directly oversees.

Trump and Milei had discussed the plan during a meeting on the sidelines of the United Nations General Assembly in New York in September. The two leaders are scheduled to meet again in Washington on Tuesday to talk more about how America can aid Argentina’s ailing economy.

“I continue to hear from American business leaders who, thanks to President Milei’s leadership, are eager to tie the American and Argentine economies more closely together,” Bessent continued, “The Trump administration is resolute in our support for allies of the United States.”

He also lauded Buenos Aires for its “sound fiscal discipline” and commitment to lower taxes, higher private investment, and creation of employment opportunities.

US support critical to calming down political uncertainty

The US intervention comes at a time when markets are questioning Milei’s staying power and the sustainability of his reforms. Argentina’s central bank has been burning through its reserves to contain the peso’s fall, while inflation is edging above 150% annually.

While details of the swap’s maturity period were not disclosed, officials familiar with the discussions said the agreement would be reviewed quarterly in coordination with the IMF and Argentina’s finance ministry.

Milei, who came to power nearly two years ago, pledged to rescue Argentina’s chronically unstable economy by “exterminating” inflation and slashing government spending. His populist “chainsaw” approach won him support among voters wary of decades of mismanagement.

However, the momentum behind Milei’s libertarian revolution has faltered in recent months. The president was in the middle of a cryptocurrency rug pull scandal involving LIBRA, but the anti-corruption office cleared his name, Cryptopolitan reported in February.

In August, protests turned violent after Milei’s sister and chief of staff, Karina Milei, was implicated in a corruption scandal. The president was pelted with stones during one demonstration, and in the following month, Milei’s La Libertad Avanza party suffered defeat in the Buenos Aires provincial election, a region that accounts for nearly 40% of Argentina’s population. 

Last Sunday, one of his closest allies José Luis Espert, was forced to withdraw from the election, after he admitted he had received a $200,000 payment from an alleged drug trafficker.