The United States realized a gain from the acquisition of Argentine pesos. Banks having engaged in discussions with the US Treasury throughout October regarding a strategy to secure billions for Javier Milei, have not made progress this week. Scott Bessent conveyed a clear message to Argentine investors: Now it’s your turn. With Bessent’s mission accomplished and Milei securing a decisive comeback victory in the midterm elections that had unsettled markets for weeks, the US rescue plan for Argentina seems to have been deprioritized for the time being. “The markets should easily and enthusiastically meet the Republic’s 2026 financing needs,” Bessent stated in a post, indicating his intention to visit Argentina again soon. The nation, characterized by its susceptibility to crises, has a debt obligation of approximately US$9 billion to investors in its global sovereign bonds due next year.
Following a warning from US President Donald Trump to Milei earlier this month that “if he doesn’t win, we’re gone,” it seems the US has already begun to withdraw, at least in financial terms, to realize its investment. “I am happy to inform you both that the Argentine economic bridge has now turned a profit for the American people,” Bessent added in a post, directing criticism towards Democratic senators Elizabeth Warren and Amy Klobuchar, who had expressed disapproval of what they characterized as a bailout for Trump’s ideological ally. As Bessent assesses his victories, currency traders in Buenos Aires observe no signs that the US Treasury is influencing the local market following the election. The Trump administration’s emphasis on US-China trade negotiations this week has left New York banks without significant new direction regarding a US$20-billion financing line that Bessent was contemplating, as per an informed source.
The United States and Argentina have established a distinct US$20-billion swap line; however, beyond the buzz on social media, the sole formal record of this agreement is a brief four-paragraph statement issued by Milei’s Central Bank. The absence of a US Treasury statement regarding the arrangement is notable, as is the lack of any reference to the Argentina swap on its official website. The press office of the Treasury Department did not provide a response to a request for comment regarding the matter. It is certainly possible that Bessent may re-enter the scene should Milei experience further setbacks or if investor apprehensions regarding Argentina’s currency policy re-emerge, a policy that numerous analysts continue to assert requires modification. The US swap line is accessible, although it is not reflected on Argentina’s Central Bank balance sheet in the same manner as its swap line with China, should the nation encounter a liquidity shortfall for bond obligations. According to Alberto Bernal, investors perceive the US aid primarily as a safeguard should conditions in Argentina fail to improve. “The market consistently perceived the Treasury line as a ‘I’ll assist you, Argentina, if you take initiative, and taking initiative entails supporting La Libertad Avanza,’” he stated. Bond prices persist in mirroring the prevailing positive sentiment. Sovereign bonds exhibited minimal movement on Thursday, yet they remained on track for an unprecedented weekly rally. Notes maturing in 2035, characterized by high liquidity, have appreciated by over 12 cents since the election, now trading above 69 cents on the dollar.
Bessent entered the fray to salvage Milei amidst a market sell-off in September, which was instigated by the libertarian leader’s significant loss in a provincial election. Volatility persisted for several weeks in the lead-up to the national midterms, driven by yet another corruption scandal and continuous market speculation regarding US intervention. As Bessent acquired pesos, Argentines predominantly sought to buy dollars. Milei’s party garnered 41 percent of the votes in the midterm elections held on October 26, effectively outpacing the principal Peronist opposition and increasing his party’s representation in the upcoming Congress, set to commence in early December. This development has enabled a range of stakeholders, from local traders to US politicians, to experience a sense of relief. Milei also commented on Thursday, referring to Bessent’s critique of Warren and Klobuchar as a “masterclass.” He seems to be preparing the champagne as well. “We eagerly await your arrival and welcome you with open arms,” Milei posted on X in response to Bessent. “MAGA!”