Washington (AFP) – US Treasury Secretary Scott Bessent said Wednesday that Washington is in talks with Argentina for a swap line allowing the country access to billions of dollars, as its right-wing leader Javier Milei seeks to calm markets ahead of midterm elections. After Bessent’s remarks, Argentina’s currency rose 2.4 percent to 1,333.90 pesos to the US dollar.
“The Treasury is currently in negotiations with Argentine officials for a $20 billion swap line with the Central Bank,” Bessent said in a social media post, a day after he and President Donald Trump spoke with Milei. The United States is also ready to buy the country’s dollar bonds, Bessent added on X. Milei, a key Latin American ally of Trump, thanked the US president and Bessent for their “support and confidence.”
Swap lines are transactions in which two central banks agree to swap their currencies at a set exchange rate for a specified period. Trump said Tuesday on the sidelines of the UN General Assembly in New York that although the United States would help Argentina, “I don’t think they need a bailout.” The Argentine peso had fallen sharply after Milei’s party was beaten by the center-left Peronist movement in a Buenos Aires provincial election on September 7. The vote was seen as a litmus test for national legislative elections scheduled for October 26.
Bessent added Wednesday that the US Treasury “stands ready to purchase Argentina’s USD bonds and will do so as conditions warrant,” among other measures. “As President Trump has stated, we stand ready to do what is needed to support Argentina,” he wrote. He said that the South American country “has the tools to defeat speculators, including those who seek to destabilize Argentina’s markets for political objectives.”
Trump earlier said he was giving Milei his “full endorsement,” while Bessent said at the start of the week that “all options for stabilization are on the table.” But the Trump administration’s plans have also raised questions domestically. Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, wrote a letter dated Monday to Bessent seeking further information about a potential “bailout” of Argentina. “It is deeply troubling that the president intends to use significant emergency funds to inflate the value of a foreign government’s currency and bolster its financial markets,” she said.
Bessent shot back at Warren’s criticism, saying she and others “failed to act when presented with a historic opportunity to stabilize Latin America economically and geopolitically during the Obama years.” Free-marketeer Milei’s election was cheered by investors in 2023, but he has begun to hemorrhage support after two years of biting austerity and a corruption scandal involving his sister.
© 2024 AFP
