Donald Trump’s administration is planning to hand Javier Milei a $20bn (£15bn) lifeline as the Argentine president battles a currency crisis.
Washington is in negotiations to establish a $20bn currency swap line with Argentina’s central bank, Scott Bessent, the US treasury secretary, said on X.
A currency swap line is an agreement between two central banks to exchange currencies and means that Argentina will be able to obtain dollars directly from the Federal Reserve.
Mr Bessent said the US was also ready to purchase Argentina’s US dollar bonds and was in “active discussions” about providing “significant stand-by credit”.
He said: “We stand ready to do what is needed to support Argentina and the Argentine people. We are working in close coordination with the Argentine government to prevent excessive volatility.”
The deal will be key in helping to support the value of the Argentinian peso, which has slumped in recent weeks amid investor concerns over flagging support for Mr Milei.
The peso jumped against the dollar on Wednesday morning after Mr Bessent’s announcement.
Speaking on Fox on Wednesday, Mr Bessent said the measures will be a “bridge to the election”, referring to the crucial mid-term vote in Argentina later in October.
Mr Trump publicly endorsed his Right-wing ally Mr Milei, on Tuesday after the pair met at the United Nations General Assembly.
Mr Milei was elected in 2023 on a promise for “chainsaw economics”: a radical libertarian agenda to slash government spending in an attempt to get debt and inflation under control.
However, he has since been hit by a wave of setbacks, suffering a double-digit defeat in provincial mid-terms amid a corruption scandal.
The events have triggered market turmoil and a currency crisis. Last week, Mr Milei spent $1.1bn of Argentina’s currency reserves in an attempt to prop up the peso.
The US government is also encouraging American businesses to invest in Argentina, Mr Bessent suggested.
He said: “I have also been in touch with numerous US companies that intend to make substantial foreign direct investments in Argentina in multiple sectors in the event of a positive election outcome.”
Argentina already has a swap line deal with China, which was renewed in April.
Mr Bessent said: “The Trump Administration is resolute in our support for allies of the United States. I will be watching developments closely, and the treasury remains fully prepared to do what is necessary.”
The US treasury secretary first stated on Monday that “all options are on the table” regarding support for Argentina’s government. His comments triggered an immediate surge in the country’s stock and bond markets.
