Treasury Secretary Scott Bessent said on Thursday that the U.S. government has bought Argentine pesos as part of a program to help the struggling South American nation.
Why it matters: While an important boost to a political ally in Argentine President Javier Milei, the move could rekindle complaints that a bailout was done at the expense of American farmers.
Catch up quick: Argentina's currency, the peso, was rocked last month after President Milei's party suffered a defeat in local elections, spurring doubts about his economic program.
- The turmoil briefly subsided after Bessent pledged a financial lifeline.
- Amid the calm in the market, Argentina suspended export taxes on soybeans, which prompted China to swoop in and buy Argentine soybeans in the kinds of volumes it would typically buy from U.S. farmers.
- American farm groups and lawmakers from farming states have voiced their frustrations over the turn of events.
- And the peso remained under pressure. Argentina has spent billions of dollars in an effort to defend the value of its currency.
Driving the news: On Thursday, Bessent said on X that Treasury had agreed on a $20 billion currency swap framework with Argentina's central bank.
- He also said that Treasury directly purchased pesos, a step the department rarely takes.
What they're saying: "As Argentina lifts the dead weight of the state and stops spending into inflation, great things are possible," Bessent wrote. "The success of Argentina's reform agenda is of systemic importance."
What's next: President Trump will meet with President Milei on Tuesday, Bessent wrote.
- Argentina holds legislative elections on Oct. 26.
What we're watching: How the stock, bond and currency markets react over the next few weeks will be telling.
