ARGENTINA, 21 October 2025 – Argentina’s central bank said on Monday it has signed a US$20 billion exchange-rate stabilization agreement with the U.S. Treasury Department, a move aimed at strengthening the peso and boosting reserves just days before the country’s midterm elections.
In a statement, the Central Bank of the Argentine Republic (BCRA) said the new deal outlines the framework for bilateral currency swap operations between the U.S. and Argentina. The announcement, however, did not include technical details.
“Such operations will allow the BCRA to expand its set of monetary and exchange rate policy instruments, including the liquidity of its international reserves,” the central bank said.
The peso closed at a record low of 1,475 per U.S. dollar, down 1.7% on the day, underscoring the volatility the agreement aims to address.
Strengthening Argentina’s Currency Defenses
The BCRA described the pact as part of a broader strategy to enhance its ability to respond to foreign exchange and capital markets volatility.
The U.S. Treasury Department has not released its own statement and did not immediately respond to requests for details on the swap arrangement.
Last week, U.S. Treasury Secretary Scott Bessent said the deal would be backed by International Monetary Fund (IMF) Special Drawing Rights (SDRs) held in the Treasury’s Exchange Stabilization Fund, which would be converted to dollars to support the arrangement.
Bessent emphasized that no additional conditions would be imposed on Argentina beyond the government’s existing fiscal austerity and economic reform programs under President Javier Milei, which are intended to promote private-sector growth.
Market Reactions and Analyst Concerns
While the swap line offers short-term relief, some analysts have expressed concerns about its sustainability and potential risks for the U.S.
Brad Setser, a former U.S. Treasury official and now Senior Fellow at the Council on Foreign Relations, said there was “a preponderance of evidence that the peso is significantly over-valued,” pointing to rapid import growth, outbound tourism, and the BCRA’s failure to meet IMF reserve accumulation targets.
“It does seem to me that the Treasury is taking an unusually large risk of losing money in supporting the peso,” Setser added.
The Wall Street Journal reported that a group of major U.S. banks — including JPMorgan Chase, Bank of America, and Goldman Sachs — had been hesitant to lend the full US$20 billion without guarantees or collateral. The banks did not comment publicly.
Political Stakes Ahead of the Vote
The timing of the deal comes just six days before Argentina’s October 26 midterm parliamentary elections, where President Milei’s party will seek to expand its minority representation in Congress.
Economy Minister Luis Caputo said last week he hoped to finalise the framework before the vote to signal economic stability and reinforce investor confidence.
U.S. President Donald Trump recently remarked that the U.S. would not “waste our time” with Argentina if Milei’s party fails to perform well in the election, briefly unsettling markets. However, Bessent later clarified that U.S. support would continue based on policy performance rather than electoral outcomes.
A stronger showing for Milei’s party could help safeguard ongoing reform efforts and block policy reversals, analysts said.
