Buenos Aires — October 20, 2025 — The Central Bank of the Argentine Republic (BCRA) has announced a $20 billion currency swap agreement with the United States Treasury Department, a move aimed at strengthening Argentina’s foreign reserves and stabilizing its volatile currency ahead of a critical midterm election.
The agreement, described by the BCRA as a “strategic step” to enhance the country’s financial resilience, will allow Argentina to conduct bilateral currency swap operations with the US — effectively granting it greater access to dollar liquidity amid severe exchange rate pressures.
A Key Move to Strengthen Foreign Reserves
In a statement released Monday, the BCRA said the swap line will expand its toolkit of monetary and exchange rate policy instruments, while bolstering the liquidity of its international reserves. The move comes as the Argentine peso continues to weaken, closing at a record low of 1,475 per US dollar, down 1.7% for the day.
The central bank explained that the arrangement is part of a comprehensive stabilization strategy designed to help it respond to volatility in foreign exchange and capital markets — a chronic issue that has long undermined investor confidence in Latin America’s third-largest economy.
Although the BCRA did not release full technical details, the US Treasury Department confirmed that the swap will be supported by International Monetary Fund (IMF) Special Drawing Rights (SDRs) held in the Treasury’s Exchange Stabilization Fund, which will be converted into dollars to facilitate the operation.
US Treasury: “No New Conditions Beyond Reforms”
US Secretary of the Treasury Scott Bessent emphasized that Washington would not impose new conditions on Argentina beyond the ongoing fiscal austerity and economic reform programs spearheaded by President Javier Milei.
“This arrangement will support Argentina’s efforts to maintain financial stability and promote private-sector growth,” Bessent said last week, noting that the United States had already begun limited peso purchases in recent weeks.
Bessent also clarified that continued US support would depend on “sound economic policies,” not necessarily the outcome of the October 26 midterm elections — a statement made to reassure markets after President Donald Trump earlier remarked that the US would not “waste our time” with Argentina if Milei’s party fails to expand its presence in Congress.
Political Stakes Ahead of Midterm Vote
The timing of the $20 billion deal is politically significant. Economy Minister Luis Caputo confirmed that the government had worked urgently to finalize the framework before the midterm parliamentary elections, in which Milei’s La Libertad Avanza party hopes to strengthen its minority position in the legislature.
The agreement could help stabilize financial sentiment in the short term, providing much-needed breathing room for the Milei administration, which faces intense pressure from both voters and investors to curb inflation, rebuild reserves, and restore growth.
Milei’s radical reform agenda — centered on deep spending cuts, dollarization proposals, and shrinking the size of government — has faced mounting resistance in Congress and the courts. Several recent defeats have slowed the pace of implementation, though analysts say the US deal may reinforce investor confidence in Milei’s long-term economic vision.
Analysts Weigh In: A Lifeline with Political Risks
Financial analysts have described the swap as a short-term liquidity lifeline that could help Argentina weather pre-election market turbulence. However, some warn that without structural reforms to address chronic fiscal deficits and inflationary pressures, the benefits of the deal may prove temporary.
“This swap gives Argentina critical breathing space, but it doesn’t solve the underlying fiscal and monetary imbalances,” said Carlos Gutiérrez, a Buenos Aires–based economist. “The next test will be whether Milei can use this window to push through deeper reforms after the elections.”
Market reactions were cautiously optimistic, with Argentine bond prices rising slightly and the peso stabilizing in late trading. Investors are now closely watching for official clarification from the US Treasury and IMF regarding the operational terms of the swap.
Outlook: Stabilization or Short-Term Relief?
For President Javier Milei, the agreement with Washington represents both a political and economic milestone. It underscores US confidence in his market-liberalization agenda while signaling renewed cooperation between Buenos Aires and Washington after years of financial strain.
Still, analysts caution that Argentina’s fragile economic recovery will hinge on maintaining discipline in fiscal spending and rebuilding credibility with international lenders. The $20 billion swap line, they say, is only a first step toward restoring financial stability in a country long defined by cyclical crises and currency devaluations.
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