U.S. spends over $20B on pesos to stabilize Argentine economy

The United States on Friday finalized an agreement for a $20 billion currency swap with Argentina’s central bank, U.S. Treasury Secretary Scott Bessent said. It also directly purchased an unspecified number of Argentine pesos on Friday, he said. The agreement came after four days of meetings between Bessent and Argentine Economy Minister Luis Caputo, he said.

The Argentine peso lost much of its value over the last six months, as President Javier Milei’s libertarian party lost some local elections in September. The Argentine Congress over the last month has overturned Milei’s vetoes of several spending bills, making a future deficit in the Argentine budget likely. The resulting market panic led to a run on the peso, according to the Credendo credit insurance group. The Argentine peso fell to an exchange rate of about 1418 pesos per U.S. dollar on Thursday, according to TradingView. The peso gained some value immediately after Bessent’s announcement.

Why did the U.S. government decide to intervene? Only the United States could take swift stabilizing action, Bessent said. Milei’s monetary reform agenda would help the Western Hemisphere remain stable and friendly to the United States, he said. The U.S. government didn’t want another failed state or China-led country in Latin America, he said. Argentina was also working closely with the International Monetary Fund on its financial strategy, Bessent said.

President Donald Trump and Milei planned to meet soon, on Oct. 14, Bessent said, though it was unclear if the leaders would discuss financial plans or other matters.

Dig deeper: Read Christina Grube’s report on violent protests in Argentina over Milei’s plans to cut government spending.