America straight bought Argentine pesos on Thursday and finalized a $20 billion forex swap line with Argentina’s central financial institution, Treasury Secretary Scott Bessent mentioned in a social media put up, a uncommon transfer aimed toward stabilizing turbulent monetary markets within the cash-strapped Latin American ally.
“U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” Bessent mentioned, including that the Treasury Division held 4 days of conferences with Argentine Economic system Minister Luis Caputo in Washington D.C. to cement the deal.
Argentina’s libertarian President Javier Milei, a fervent admirer of U.S. President Donald Trump, thanked Bessent for his “strong support” and Trump for his “powerful leadership.”
“Together, as the closest of allies, we will make a hemisphere of economic freedom and prosperity,” Milei mentioned in a social media put up.
Bessent, underneath hearth from U.S. farmers and Democratic lawmakers, has insisted that the credit score swap just isn’t a bailout. Farmers are offended concerning the thought of rescuing Argentina, whose personal farmers have benefited from a latest gush of gross sales of soybeans to China on the expense of their U.S. counterparts. Lawmakers have pushed Trump to elucidate how this monetary assist aligns together with his “America First” agenda.
After the announcement Thursday, a gaggle of Democratic Senators launched the “No Argentina Bailout Act,” which might cease the Treasury Division from utilizing its Change Stabilization Fund help Argentina.
“It is inexplicable that President Trump is propping up a foreign government, while he shuts down our own,” Democratic Sen. Elizabeth Warren of Massachusetts, mentioned in an announcement. “Trump promised ‘America First,’ but he’s putting himself and his billionaire buddies first and sticking Americans with the bill.”
It doesn’t assist that repeated bailouts have didn’t stabilize the crisis-stricken economic system of Argentina. Because the Worldwide Financial Fund’s largest debtor, it owes the worldwide lender a staggering $41.8 billion.
Milei, a wild-haired far-right economist, got here to workplace in late 2023 on the daring promise that this time could be totally different.
He vowed to take a chainsaw to reckless public spending that he inherited from his left-wing predecessor. However his radical austerity program has been painful, with no financial revival in sight and Argentines are shedding endurance.
Now Milei faces his best take a look at but as he heads right into a midterm congressional election on Oct. 26 that might resolve the destiny of his free-market experiment. A disastrous defeat in native elections final month triggered a sudden exodus from Argentine property as buyers fretted over the nation’s political dysfunction, overvalued peso and quickly depleting overseas change reserves.
The U.S. monetary assist provides Milei an important reprieve. On Thursday, Argentina’s dollar-denominated bonds rose about 10% on Bessent’s affirmation of the credit score line and the Buenos Aires inventory market surged 15%.
Economic system Minister Caputo expressed his “deepest gratitude” to Bessent following the announcement.
“Your steadfast commitment has been remarkable,” he wrote.
Bessent made no point out of any financial circumstances hooked up to the swap line for Argentina, main many observers to criticize the intervention as a pre-election reward for a loyal pal slightly than an funding in a strategic accomplice.
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DeBre reported from Buenos Aires, Argentina.
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