The United States has taken an extraordinary step to bolster Argentina’s embattled economy, finalizing a $20 billion currency swap line and directly purchasing Argentine pesos in a move that signals growing alignment between Washington and Buenos Aires.
Treasury Secretary Scott Bessent confirmed the agreement Thursday, describing it as part of a broader effort to stabilize markets and reinforce confidence in a key Latin American partner.
The decision marks one of the largest direct currency operations the U.S. Treasury has undertaken in recent decades. The deal comes after four days of intensive negotiations in Washington between Bessent and Argentina’s Economy Minister Luis Caputo, who thanked the U.S. government for its “steadfast commitment.”
President Javier Milei, the right-wing libertarian who has forged a close ideological bond with U.S. President Donald Trump, swiftly celebrated the development. In a post on X, Milei thanked both Trump and Bessent for their “powerful leadership and steadfast support,” saying the agreement was the beginning of a new hemisphere of economic freedom and prosperity.
“Together, as the closest of allies, we will make a hemisphere of economic freedom and prosperity,” Milei said.
Milei’s warm reception in Washington underlines his growing favor among American conservatives, who have lauded his unflinching free-market agenda and his fierce opposition to socialism. Trump has repeatedly praised Milei as “a brilliant mind with courage to save his country,” while several figures in his administration have described Argentina’s economic experiment as “a model for the Western Hemisphere.”
This latest U.S. intervention offers Milei a much-needed reprieve. Argentina’s economy, though showing faint signs of stabilization, remains mired in deep distress. While monthly inflation has fallen significantly, Argentina’s annual inflation rate is still high, hovering around 200%. The government’s fiscal adjustment put an end to years of monetary financing of deficits, which helped curb inflation from its peak of over 211% in December 2023. The country’s foreign reserves, which were nearly depleted midyear, have inched upward due to a combination of export reforms and austerity measures. Industrial production has improved slightly, and the trade deficit has narrowed for the first time in over two years.
Yet, despite these early signs of progress, Argentina’s economic reality remains grim. Concerns remain about the country’s long-term economic stability and the high poverty rate, which official data showed as having decreased in late 2024. The peso continues to lose value in parallel markets and unemployment is rising. Milei’s aggressive spending cuts have slashed subsidies and government programs, fueling discontent among unions and low-income groups. With a critical midterm election looming on October 26, the U.S. credit line may prove essential in averting a full-blown financial collapse that could derail his reform agenda.
The political calculus behind Washington’s move has drawn sharp criticism at home. Democratic lawmakers and U.S. farmers have accused the Trump administration of hypocrisy for aiding a foreign government while facing budgetary gridlock domestically. Senator Elizabeth Warren led a group of Democrats in unveiling the No Argentina Bailout Act, which seeks to prevent the Treasury from using the Exchange Stabilization Fund to assist Buenos Aires.
“It is inexplicable that President Trump is propping up a foreign government while he shuts down our own,” Warren said. “Trump promised ‘America First,’ but he’s putting himself and his billionaire buddies first and sticking Americans with the bill.”
Treasury Secretary Bessent pushed back, insisting the arrangement is not a bailout but a market-stabilizing measure.
“U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” Bessent said.
Argentina’s markets responded with immediate optimism. The Buenos Aires stock exchange jumped 15%, while dollar-denominated bonds surged 10% on the news of the swap line. Economy Minister Caputo said the deal would provide “breathing room” for Argentina’s financial system.
Analysts, however, warned that the absence of disclosed terms raises questions about transparency and timing. Many believe the deal looks less like a financial intervention and more like a political reward, designed to strengthen Milei before the elections and reinforce Trump’s ideological influence in the region.
Milei, who has styled himself as a disciple of Reaganomics and Austrian free-market theory, has rapidly emerged as a conservative icon in the Western Hemisphere. His administration’s focus on eliminating the fiscal deficit, reducing the central bank’s influence, and pushing massive deregulation has drawn praise from Washington but hardship at home.
Still, with U.S. backing now firmly secured, Milei’s government gains both financial and political momentum. For Argentina, the infusion of dollar liquidity could slow capital flight, strengthen the peso temporarily, and buy time for reforms to take hold. But it is not clear for now whether this partnership will stabilize the crisis-plagued economy — or simply postpone another collapse.
