US Treasury Secretary Scott Bessent said Wednesday that Washington is in talks with Argentina for a massive swap line allowing the country access to dollars.
The announcement comes as Argentina's President Javier Milei seeks to calm markets ahead of midterm elections.
"The Treasury is currently in negotiations with Argentine officials for a US$20-billion swap line with the Central Bank," Bessent said in a social media post, a day after he and US President Donald Trump spoke with Milei.
Bessent also said the United States would purchase dollar-denominated bonds issued by Argentina, "as conditions warrant," and that a number of US firms are ready to invest in the South American country should the results of the upcoming October 26 midterms go in Milei's favour.
After Bessent's remarks, Argentina's peso rose 2.4 percent to 1,333.90 pesos to the US dollar.Milei, a key Latin American ally of Trump, thanked the United States for its "strong support and confidence" in a message on X.
"We deeply value our friendship with the United States and its commitment to strengthening our partnership based on shared values. Together we will build a path of stability, prosperity and freedom," said the La Libertad Avanza leader.
Swap lines are transactions in which two central banks agree to swap their currencies at a set exchange rate for a specified period.
Trump said Tuesday on the sidelines of the UN General Assembly in New York that although the United States would help Argentina, "I don't think they need a bailout."
Argentina's peso has been falling sharply since Milei's party was beaten by the opposition Peronist movement in a Buenos Aires Province election on September 7. The vote was seen as a litmus test for the national legislative elections next month.
Bessent added in his Wednesday post on the X social network that the US Treasury also "stands ready to purchase Argentina's USD bonds and will do so as conditions warrant," among other measures.
"As President Trump has stated, we stand ready to do what is needed to support Argentina," he wrote.
He added that the Milei government "has the tools to defeat speculators, including those who seek to destabilise Argentina's markets for political objectives."
Trump earlier said he was giving Milei his "full endorsement," while Bessent said at the start of the week that "all options for stabilisation are on the table."
But the Trump administration's plans have also raised questions domestically.
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, wrote a letter dated Monday to Bessent seeking further information about a potential "bailout" of Argentina.
"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," she said.
Bessent shot back at Warren's criticism, saying she and others "failed to act when presented with a historic opportunity to stabilise Latin America economically and geopolitically during the [ex-US president Barack] Obama years."
Free-marketeer Milei's election was cheered by investors in 2023 but he has begun to haemorrhage support after two years of biting austerity and a corruption scandal involving his sister.
– TIMES/AFP
Comments