MercoPress. South Atlantic News Agency

Argentina and US finalize currency swap deal

The deal “will allow the BCRA to expand the set of monetary and exchange rate policy instruments available”

The United States and Argentina formalized a US$20 billion currency swap agreement just days before Argentina's national legislative elections next Sunday.

Argentina's Central Bank (BCRA) announced the deal with the US Treasury, stating its objective is “to contribute to Argentina's macroeconomic stability, with a special emphasis on preserving price stability and promoting sustainable economic growth.”

“These operations will allow the BCRA to expand the set of monetary and exchange rate policy instruments available, including strengthening the liquidity of its international reserves, in line with the regulatory functions established in its Charter,” the BCRA also mentioned in a statement.

It added that the agreement “is part of a comprehensive strategy that reinforces Argentina's monetary policy and strengthens the Central Bank's ability to respond to conditions that could lead to episodes of volatility in the foreign exchange and capital markets.”

The deal is part of a larger, historic financial bailout promised by the US Republican administration of President Donald Trump for Argentina's struggling economy as a sign of support for Argentine President Javier Milei.

Trump defended the aid, stating that Argentina is “fighting for its life” and is “dying.” He also threatened that US generosity would cease if Milei's party lost the elections. He also suggested the US might buy Argentine beef to lower beef prices for American consumers.

Despite the swap confirmation, the Argentine financial market was volatile as disbelief persisted amid fears of a devaluation. The official dollar closed at AR$1,495 (sale) while the “blue” quotation (a euphemism for “black market”) barely exceeded AR$1,500. Other rates traded even higher.

Analysts noted that while the finalization of the deal was symbolic and dispelled doubts about its conditionality, they still expected exchange rate pressure to continue throughout election week.