The US is preparing to provide 40 billion dollars in support to Argentina.

US Support Plans for Argentina

Argentina's government bonds experienced a brief surge on Wednesday following the announcement by US Treasury Secretary Scott Bessent that he is prepared to provide a total of 40 billion dollars in aid to the Javier Milei government, double previous commitments.

Credit Opportunities from the Private Sector

According to media sources from Semafor, Bessent is working on a 20 billion dollar credit facility from the private sector. This move will complement a similarly sized currency swap line established by the government.

Fluctuations in the Peso

Meanwhile, Axios reported that Bessent confirmed the US Treasury is again purchasing Argentine pesos on the spot market. Banco Santander SA played a role in the process by selling dollars on behalf of the US Treasury. According to data provided by Bloomberg, bonds due by 2035 rose by two cents, but many of the gains were reversed as doubts about the US government's long-term commitment to Argentina resurfaced.

Peso's Losses and Dollar Exchange Rate

The Argentine peso compensated for its losses, declining by approximately 1.5% following the approval of US market intervention, and the dollar/Argentine peso closed at around 1,380.

Effects of the Election Process

US President Donald Trump stated this week that the 20 billion dollar bailout package provided to Buenos Aires could depend on Javier Milei's success in the midterm elections. He expressed, "If he wins, we stay with him; if he loses, we go." Economist Santiago Resico at the Argentine brokerage firm one618 noted that Bessent's announcement could help alleviate some financial concerns before the midterm elections on October 26, but also increases uncertainty about the outcomes.

Resico stated, "The uncertainty regarding the US's intentions for the aid package diminishes the importance of the aid's magnitude."