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

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.

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

On Monday, the pricing of two-month Argentine peso forward contracts suggested that the USD/ARS exchange rate is likely to exceed 1600, indicating a new round of peso selling.

Argentine investors fear that due to the central bank's insufficient foreign exchange reserves, Milei may 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 stand at only $5 billion, including a loan from the International Monetary Fund (IMF).

The aid from the United States will effectively supplement the Argentine central bank's dollar reserves. However, as of now, neither country has disclosed 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 the lack of policy transparency 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 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.