Washington and Buenos Aires are negotiating a potential $20bn currency swap arrangement as the United States prepares to deploy an array of financial instruments to support Argentina's beleaguered economy, Treasury Secretary Scott Bessent announced on September 24 following high-stakes talks between Presidents Donald Trump and Javier Milei a day prior.

"Yesterday, President Trump and I spoke extensively with President Milei and his senior team in New York," Bessent wrote on X. "As President Trump has stated, we stand ready to do what is needed to support Argentina and the Argentine people.”

The Treasury chief confirmed that American officials stand prepared to acquire Argentine sovereign bonds and provide substantial emergency financing through the Exchange Stabilisation Fund, though final terms remain under discussion following the bilateral summit at the United Nations General Assembly in New York.

This remarkable American commitment to backstop a foreign currency marks a significant departure from conventional US financial diplomacy, driven by mounting speculation against the peso that risks unravelling the Argentine libertarian president's ambitious market-oriented reforms.

Speaking after the presidential meeting, Trump rejected rumours that Argentina required a traditional rescue package. "We're gonna help them but I don't think they need a bailout. He's doing a fantastic job," the American leader said of his ideological ally, whilst offering what he termed his "full endorsement" for Milei's 2027 re-election campaign.

The urgency of American action became apparent after Argentina's monetary authorities exhausted roughly $1bn in hard currency reserves within 48 hours last week, attempting to prevent the peso from breaching its trading ceiling of 1,475 per dollar—a threshold it briefly exceeded on 17 September 17 before further interventions restored order.

Bessent, who made Buenos Aires his inaugural overseas destination as Treasury Secretary in April, praised Argentina's achievements under Milei. "Under President Milei, Argentina has taken important strides toward stabilisation. He has achieved impressive fiscal consolidation and a broad liberalization of prices and restrictive regulations, laying the foundation for Argentina's historic return to prosperity," he stated, whilst warning that "Argentina has the tools to defeat speculators, including those who seek to destabilise Argentina's markets for political objectives." In his X statement, he confirmed that "the Treasury is currently in negotiations with Argentine officials for a $20bn swap line with the Central Bank" and that the US "stands ready to purchase Argentina's USD bonds.”

Since Bessent's initial declaration of support on September 22, government bonds maturing in 2029 have surged from 65 to 71 cents on the dollar whilst Argentine equities listed in New York rallied 12 per cent. According to Ambito, the nation's country risk, as calculated by JPMorgan, compressed by more than 17% to nearly 800 points on September 24, reversing weeks of deterioration.

The intervention reflects Washington's determination to prevent Beijing from expanding its financial footprint in South America, where Argentina represents what Bessent termed a "systemically important" ally. This geopolitical dimension has gained prominence as tensions mount between Washington and leftist Brazilian President Lula da Silva over the coup conviction of former president Jair Bolsonaro, making Argentine alignment increasingly valuable.

Trump's effusive praise for Milei—calling him "a truly fantastic and powerful leader"—and his adoption of the slogan "Make Argentina Great Again" betray the personal chemistry between the two leaders, which has accelerated diplomatic coordination typically requiring months of technical negotiations.

But the financial turbulence requiring American intervention stems from far deeper political vulnerabilities. The Argentine president's party suffered a devastating electoral defeat in Buenos Aires province earlier this month whilst his sister and close advisor Karina faced corruption allegations, triggering legislative rebellions that have successfully overturned presidential vetoes on spending measures—developments that sparked the recent capital flight.

In response to the crisis, Milei's administration has already eliminated export levies on agricultural products until month's end, sacrificing billions in fiscal revenues to encourage farmers to convert their dollar holdings at official rates rather than hoarding grain stocks.

The World Bank simultaneously pledged to expedite $4bn from its existing $12bn Argentine facility, prioritising investments in extractive industries and infrastructure that could generate export revenues.

Yet the proposed American assistance has already provoked US domestic opposition, with Senator Elizabeth Warren challenging Bessent over plans “to use significant emergency funds to inflate the value of a foreign government’s currency and bolster its financial markets," as reported by Reuters.

The intervention has also generated unintended consequences for American agriculture, as Buenos Aires's removal of soybean levies—previously taxed at 26%—has redirected Chinese purchasing toward Argentine suppliers, potentially disadvantaging US farmers already grappling with retaliatory tariffs, according to Axios. Bessent noted that Washington is "working with the Argentine government to end the tax holiday for commodity producers converting foreign exchange," suggesting awareness of these complications.

Market analysts, meanwhile, remain sceptical about whether even generous American support can stabilise Argentina without addressing underlying political fragility. Speaking to The Economist, Buenos Aires-based economist Martín Rapetti suggests anything below $10bn would prove inadequate, particularly given widespread expectations that authorities must modify their managed float system following October's congressional elections. Bessent acknowledged private sector interest, noting he had "been in touch with numerous US companies who intend to make substantial foreign direct investments in Argentina" contingent on positive electoral outcomes.

The electoral stakes are considerable. Opposition forces, emboldened by recent victories, are advancing multiple spending initiatives that threaten the fiscal discipline central to investor confidence. Peronist provincial governor Axel Kicillof, an erstwhile finance minister for former president Cristina Fernandez de Kirchner whose state-interventionist economic views alarm investors, has emerged as a potential presidential challenger after consolidating support in Argentina's most populous region.

Despite achieving monthly inflation rates below 2% for four consecutive periods, Milei's stabilisation has come through severe recession and wage compression, with many workers experiencing declining purchasing power compared to early 2023 levels.

Economy Minister Luis Caputo, who attended the New York discussions alongside Milei's sister Karina and Foreign Minister Gerardo Werthein, hailed the negotiations as "historic" whilst celebrating what he called unprecedented international support for Argentine reforms.

Nevertheless, fundamental vulnerabilities persist. Despite the latest rebound, according to Reuters Argentine eurobonds continue yielding between 16 and 26% across the curve, levels that effectively lock the country out of international capital markets.

Argentina's $44bn programme with the IMF, renegotiated under Milei in April, has seen $14bn in disbursements following July's approval of the first review, which released $2bn. The Fund has recently signalled flexibility on technical targets, acknowledging that reserve buffers were "taking longer to rebuild" than anticipated, though it commended the government's delivery of primary surpluses and success in bringing monthly inflation below 2% for four consecutive months. However, net international reserves remain at what the IMF describes as "critically low" levels, with a further $6bn contingent on meeting year-end targets.

On top of that, Argentina maintains an $18bn currency swap arrangement with China's central bank, of which $5bn remains outstanding from the previous Peronist government. 

Market participants recognise that whilst American financial firepower might temporarily stabilise the peso, Argentina's economic trajectory depends on domestic political dynamics. Should October's elections confirm legislative gridlock and diminish Milei's re-election prospects, even substantial US backing may prove insufficient to prevent renewed crisis, The Economist observes.

Bessent seemed aware of these political dynamics, stating that "immediately after the election, we will start working with the Argentine government on its principal repayments," whilst pointing out that Trump had given Milei "a rare endorsement of a foreign official" demonstrating confidence in "the geopolitical strategic importance of the relationship between the United States and Argentina.”