WASHINGTON (Realist English). The U.S. Treasury intervened in Argentina’s currency market on Thursday for the first time in nearly three decades, in an extraordinary effort to help President Javier Milei, a close ally of Donald Trump, stabilize the plunging peso.
Treasury Secretary Scott Bessent said the U.S. had “directly purchased Argentine pesos” to bolster the currency after Buenos Aires exhausted billions of dollars from its reserves to defend the exchange rate. According to the New York Fed, Washington has intervened in currency markets only three times since 1996.
Bessent also announced the finalization of a $20 billion currency swap agreement with Argentina’s central bank — a deal designed to inject liquidity into the struggling economy and reinforce Milei’s market-liberal reform program.
“Argentina faces a moment of acute illiquidity,” Bessent said in a statement. “The U.S. Treasury is prepared to take exceptional measures to provide stability to markets. The success of President Milei’s reforms is of systemic importance.”
The intervention follows weeks of turmoil in Argentina’s financial markets, with investors questioning the sustainability of the government’s exchange-rate band, which Milei has maintained to curb inflation ahead of the October 26 midterm elections.
The announcement triggered an immediate market rebound. Argentina’s 10-year bond yield fell to 11.47 percent, its lowest level since September, while the peso strengthened 0.6 percent, reaching its best position in a week.
Economy Minister Luis Caputo thanked Bessent for his “unwavering support,” posting on X that Washington’s commitment “has been remarkable.”
Local economists estimate Argentina’s Treasury has sold about $1.8 billion in recent days to keep the peso within the band. Without U.S. backing, investors feared the country could drain much of its remaining $13 billion in IMF-linked reserves before the vote.
Bessent said the exchange-rate framework “remains fit for purpose”, adding that Argentina’s policies “are sound when anchored in fiscal discipline.”
However, many analysts argue the peso remains artificially overvalued, and futures markets had already priced in a post-election devaluation prior to the U.S. move.
The intervention was conducted through the U.S. Exchange Stabilization Fund, the same emergency mechanism used to provide a $20 billion loan to Mexico during its 1994 peso crisis — a move later repaid at a profit. The fund last carried out a major foreign-exchange operation in 2011, when the U.S. and G7 sold yen following Japan’s devastating earthquake.
Caputo held four consecutive days of talks with Treasury officials this week, and Milei is expected to meet President Trump at the White House on October 14, underscoring the deepening alignment between Washington and Buenos Aires amid mounting financial stress.
