WASHINGTON, Oct 10: The United States directly bought Argentine pesos and sealed a $20 billion currency swap with Argentina’s central bank, Treasury Secretary Scott Bessent said on Thursday, the Associated Press (AP) reported.
The move, considered rare, is meant to calm volatile markets in the cash-strapped South American nation. Bessent said Washington was “ready to take whatever exceptional measures” were necessary to restore market stability after four days of meetings with Argentine Economy Minister Luis Caputo in Washington, according to the AP.
Argentina’s President Javier Milei, a staunch supporter of Donald Trump, thanked both Trump and Bessent for their backing, declaring that the two nations would pursue “a hemisphere of economic freedom and prosperity,” the AP stated.
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Bessent, already facing criticism from U.S. farmers and Democratic lawmakers, rejected claims that the swap amounts to a bailout. American farmers are angered by Argentina’s recent surge in soybean exports to China, which has cut into U.S. sales, the AP mentioned.
Democratic lawmakers questioned how Trump’s administration could justify such a move under its “America First” banner. Following the announcement, several Democratic senators introduced the “No Argentina Bailout Act” to bar the Treasury from using the Exchange Stabilization Fund to support Argentina. Senator Elizabeth Warren said Trump was “propping up a foreign government while shutting down our own,” according to the AP.
Repeated international rescues have done little to fix Argentina’s chronic instability. The country remains the International Monetary Fund’s largest debtor, owing $41.8 billion. Milei, who took office in 2023 promising radical spending cuts, has implemented sweeping austerity measures that have deepened hardship without visible economic recovery, added the AP.
With midterm elections approaching on October 26, he faces growing frustration at home after heavy local election losses and an investor sell-off that hammered the peso and drained reserves, as reported by the AP.
The U.S. deal gives Milei breathing space. Argentine dollar bonds jumped 10 percent, and the Buenos Aires stock market gained 15 percent after Bessent confirmed the swap line. Minister Caputo praised Bessent’s “steadfast commitment.” Still, critics noted the absence of any conditions tied to the aid, calling it a political favor to a friendly leader rather than a strategic investment, the AP reported.
