WASHINGTON — The US Treasury has confirmed it is in advanced discussions with Argentina to establish a $20 billion currency swap line, in a move aimed at bolstering the South American nation’s economy ahead of crucial midterm elections. This marks a significant show of support from the United States for Argentina’s libertarian President Javier Milei, who is facing mounting economic challenges and political pressure.
US Treasury Secretary Scott Bessent made the announcement Wednesday on social media, revealing that talks are underway with Argentine officials to implement the swap line via Argentina’s Central Bank. The financial maneuver would provide Argentina with critical access to US dollars in exchange for pesos, offering a temporary liquidity boost to stabilize the country’s volatile currency markets.
The peso responded positively to the news, rising 2.4 percent to 1,333.90 pesos per US dollar shortly after Bessent’s comments. The optimism in the financial markets signals cautious confidence that international support may help Argentina avert a deeper crisis.
US Treasury Eyes Argentina’s Dollar Bonds
Former US President Donald Trump, a key political ally of Milei, also weighed in during a brief press interaction on the sidelines of the UN General Assembly in New York on Tuesday.
“The United States will help Argentina,” Trump said. “But I don’t think they need a bailout.”
Trump’s remarks align with Bessent’s message of confidence in Argentina’s ability to stabilize its economy using available tools, rather than through traditional international bailouts.
Milei, who came to power on a wave of libertarian and free-market enthusiasm, expressed gratitude to both Trump and Bessent for their “support and confidence” in his administration. Milei has previously described Trump as a model for his political style and economic vision.
In a notable expansion of Washington’s potential involvement, US Treasury Bessent also revealed that the US Treasury is prepared to purchase Argentina’s dollar-denominated bonds “as conditions warrant.” This type of bond-buying strategy is rare in bilateral economic relations and would represent a substantial signal of trust from the US government.
“The US Treasury stands ready to purchase Argentina’s USD bonds and will do so as conditions warrant,” Bessent stated. “We stand ready to do what is needed to support Argentina.”
According to Bessent, Argentina still has the financial and institutional tools necessary to “defeat speculators, including those who seek to destabilize Argentina’s markets for political objectives.”
The US Treasury’s direct involvement is part of a broader strategy to ensure financial stability in Latin America, a region often overlooked in global monetary policy discussions but strategically important to the United States.
However, the move has not come without domestic political controversy in the United States. Senator Elizabeth Warren, the top-ranking Democrat on the Senate Banking Committee, raised red flags in a formal letter to Bessent earlier this week.
“It is deeply troubling that the president intends to use significant emergency funds to inflate the value of a foreign government’s currency and bolster its financial markets,” Warren wrote.
Her concerns center on the precedent of using US funds to influence the financial trajectory of foreign governments, particularly when such actions may carry political motivations. The timing—so close to Argentina’s midterm elections—has only heightened scrutiny.
Bessent responded swiftly to the criticism, taking a pointed jab at Warren and the Obama-era economic strategy.
“Senator Warren and others failed to act when presented with a historic opportunity to stabilize Latin America economically and geopolitically during the Obama years,” Bessent posted.
Argentina’s economy has been under sustained pressure, with inflation soaring and the national currency losing value rapidly in recent months. After a poor showing by Milei’s party in a key provincial election in Buenos Aires on September 7—where the center-left Peronist movement gained ground—investor confidence took a sharp dip.
The October 26 legislative elections are widely seen as a referendum on Milei’s economic policies, which have included sweeping austerity measures, privatization drives, and cuts to public spending.
Though initially welcomed by international investors, Milei’s popularity has declined amid corruption scandals, including one involving his sister, and growing discontent over economic hardship among everyday Argentines.
With just weeks to go before the midterm vote, the US Treasury’s support could prove crucial for Milei’s ability to project economic control and international credibility. The potential $20 billion swap line and bond purchases may help prop up Argentina’s markets temporarily—but whether they can sway voter sentiment remains uncertain.
As the Milei administration doubles down on free-market policies and external support from the United States, the outcome of Argentina’s elections could determine not just its economic future but also the durability of US-Argentina relations under a Trump-aligned foreign policy model.
Source- EWN
