Argentina’s central bank says it signed $20bn currency swap deal with US

Six days before a crucial midterm election, the Central Bank of the Argentinian Republic (BCRA) announced the signing of a $ 20 billion exchange rate stabilization agreement with the US Treasury Department.

The US and Argentina’s statement on Monday, which was made by the central bank, stated that the agreement specifies conditions for bilateral currency swap operations, but it provided no technical details.

According to the central bank, “These operations will enable the BCRA to expand its set of monetary and exchange rate policy instruments, including the liquidity of its international reserves.”

The day-end price of 1, 475 per dollar saw the Argentinian peso drop to record low, down 1.7 percent.

The BCRA described the agreement as a part of a comprehensive plan to improve its ability to handle volatility in foreign exchange and capital markets.

The US Treasury did not respond to a request for more information about the new swap line or make a statement about the arrangement.

The arrangement, according to US Secretary of the Treasury Scott Bessent, will be supported by Special Drawing Rights held by the Treasury’s Exchange Stabilization Fund and converted to dollars.

Beyond President Javier Milei’s government’s continued fiscal austerity and economic reform efforts to encourage more private-sector growth, Bessent has stated that the US will not impose any additional restrictions on Argentina.

He has made recent announcements to buy pesos&nbsp in the US, but he has not provided specifics.

Voting in the middle of the election

The swap deal framework, which will allow Milei’s party to increase its minority presence in the legislature, should be finalized before the midterm parliamentary vote on October 26, according to the Argentinian minister of economy Luis Caputo, who last week stated that he hoped to do so.

Milei has suffered a number of recent political debacles as a result of efforts to address Argentina’s economic woes through drastic fiscal spending cuts and a dramatic shrinking government.

If Milei’s party loses the midterm elections, US President Donald Trump declared last week that the US would not “waste our time” with Argentina. Bessent clarified that continued US support depended on “good policies,” not necessarily the outcome, before the comment briefly shocked local markets.