U.S. Aid Imminent! Argentina Confirms Currency Agreement, Yet Peso Hits New Lows

Argentina is mired in asset sell-off panic due to political risks, with the Argentine peso falling for several consecutive weeks, highlighting the country's turbulent financial situation.

Central bank officials confirmed on Monday that a $20 billion currency swap agreement has been signed with the U.S. Treasury Department. Furthermore, since October 9, the U.S. Treasury has purchased Argentine pesos three times, with Argentine economists estimating the total amount to be approximately $400 million.

In addition, U.S. Treasury Secretary Besant pointed out last week that arrangements are being made for the U.S. private sector to provide a $20 billion loan to Argentina.

Despite the U.S. sparing no effort in "firefighting," the Argentine peso still fell on Monday. In early trading, the USD/ARS rate fell nearly 1% to 1476, setting a new intraday low, before paring some losses.

Argentine investors fear that due to the central bank's insufficient foreign exchange reserves, Milei might be forced to devalue the Argentine peso after the midterm elections. According to estimates by economic consultancy Invecq, the Argentine monetary authority's liquid reserves are only $5 billion, which includes a loan from the International Monetary Fund.

The aid from the United States will effectively supplement the Argentine central bank's dollar reserves. However, as of now, neither country has disclosed the details of the currency swap plan. UBS analyst Pedro Quintanilla-Dieck expressed disappointment, stating that the governments only confirmed information already known to the market without providing additional details, and that policy opacity is dampening market optimism.

Beyond financial assistance, U.S. President Trump stated last Sunday that the United States could potentially purchase Argentine beef to help the country weather the crisis, while also lowering U.S. beef prices. Trump also emphasized that Argentina has no money, has nothing, and is fighting for survival.

Previously, the U.S. government faced criticism for aiding Argentina, citing the current U.S. government shutdown due to the fiscal spending bill and Argentina capturing the largest export market for U.S. soybeans, which has caused dissatisfaction among some Americans.