US supports Argentina and President Milei with $20B ‘rescue’ package before elections

The U.S. Treasury finalized a $20 billion currency swap framework with Argentina and bought pesos in the open market on Thursday, making good on President Donald Trump’s pledge to prop up the wobbling country and sending the peso and Argentine dollar bonds sharply higher, Reuters writes.

“The U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” U.S. Treasury Secretary Scott Bessent said in announcing the actions on X. Argentina’s 2035 bond rose 4.5 cents to trade at 60.5 cents on the dollar, while the peso closed at 1,418 per dollar, up 0.8% on the day after falling 3% earlier. Local stocks (.MERV) rose 5.3% Thursday. Last month they touched a 2025 low, days before Bessent’s initial support pledge. Argentine stocks traded in U.S. exchanges (.BKAR) rallied 13%.

Bessent issued his statement at the end of four days of meetings with Argentine Finance Minister Luis Caputo that also involved officials from the International Monetary Fund, which has a $20 billion loan program with Argentina.

Bessent noted that Argentina’s policy, based on fiscal discipline, is stable, and the exchange rate range is appropriate for the purpose. He emphasized that Argentina is facing a situation of “extreme liquidity” and that the international community, including the IMF, is united behind Argentina and its austerity fiscal strategy, but only the United States can take swift action, and that is exactly what has been done: the United States immediately bought pesos.

The backstop is partly aimed at giving Argentine President Javier Milei’s party a boost in the country’s Oct. 26 midterm legislative elections. His party wants to strengthen its minority position to solidify his agenda to cut government spending and boost private-sector investment.