U.S. Treasury Launches $20 Billion Swap Deal to Stabilize Argentina’s Economy

The U.S. Treasury finalized a $20 billion currency swap agreement with Argentina, marking a major step to stabilize the struggling South American economy. The move, fulfilling President Donald Trump’s promise to support Argentina, sent the peso and Argentine bonds soaring. Treasury Secretary Scott Bessent announced the measure on X, stating the U.S. was prepared to take “exceptional measures” to ensure market stability.

Following the announcement, Argentina’s 2035 bond rose 4.5 cents to 60.5 cents on the dollar, while the peso strengthened 0.8% to 1,418 per dollar. Local stocks climbed 5.3%, and Argentine shares listed in the U.S. jumped 13%. The action followed four days of meetings between Bessent and Finance Minister Luis Caputo, with participation from the International Monetary Fund (IMF), which maintains a $20 billion loan program with Argentina.

IMF Managing Director Kristalina Georgieva praised the U.S. intervention, emphasizing alignment with Argentina’s economic program centered on fiscal discipline and foreign reserve buildup. The Treasury declined to reveal details of the peso purchases or swap structure.

Bessent clarified on Fox News that the deal was not a bailout, stressing that no funds were transferred to Buenos Aires and that the Exchange Stabilization Fund (ESF) “has never lost money.” He also cited strategic U.S. benefits, including Argentina’s cooperation to reduce Chinese influence and expand U.S. investment in rare earth and uranium resources.

The backstop is also seen as a political boost for President Javier Milei ahead of Argentina’s October 26 midterm elections, where his party seeks to expand legislative power amid rising dissent over austerity. Analysts believe the U.S. support could enhance Milei’s market credibility but warned its political impact remains uncertain.

Milei thanked Trump and Bessent on X, calling the U.S. “the closest of allies.” Investors reacted positively, with analysts saying the intervention averted a potential currency collapse.

Meanwhile, U.S. Senate Democrats criticized the move, proposing a bill to block the use of the ESF for foreign bailouts. Senator Elizabeth Warren condemned Trump for “propping up a foreign government while shutting down our own.”