Donald Trump facing bipartisan opposition for bailing out Argentina, as Peso keeps plunging.

Oct 2025 : US President Donald Trump was determined to rescue the government of his staunch Argentine ally, Javier Milei. But what appears is the fact that his particular approach seems to generate more tension than it dissipates. A week ago, the US president received Milei at the White House and confirmed a multimillion-dollar aid package. However, since he made it contingent on the outcome of next Sunday’s midterm elections, the financial turmoil deepened. This Monday, the Argentine Central Bank announced a $20 billion “exchange stabilisation agreement with the US Department of the Treasury”. The positive effect was offset by Trump’s statements that painted a bleak picture: “Argentina is fighting for its life, they have no money, they are dying“.

“The Central Bank of the Argentine Republic (BCRA) announces the signing of an exchange rate stabilisation agreement with the United States Department of the Treasury, for an amount of up to $20 billion“, the bank said in a statement. The BCRA explained that the objective is “to contribute to Argentina’s macroeconomic stability, with special emphasis on preserving price stability and promoting sustainable economic growth“.

According to the statement, the swap will allow the Central Bank to “strengthen the liquidity of its international reserves“. In a context marked by the depreciation of the Argentine currency, along with the fall in bonds and stocks, the left-wing government aims to strengthen its ability to “respond to conditions that could lead to episodes of volatility in the foreign exchange and capital markets“.

However, there are uncertainties in the North American market about how the swap and other aid tools would be implemented in the event that the Government does not obtain a good result in the elections and how the Treasury’s interventions led by Secretary Scott Bessent on the dollar, whose price is rising again today, will continue.

“The market’s fear is that if the outcome of Sunday’s elections were very bad for the government, the swap would be very difficult to use. That’s why they won’t rest easy until they see the election result“, economist Alberto Ades, director of research and strategy at the hedge fund NWI Management in New York, told reporters.

“In the worst-case scenario for the government, with a significant lead in favour of the opposition [in the elections], which would allow it in Congress, for example, to destroy the fiscal plan: do you think the Treasury would let it sell dollars on the market to contain the impact of the dollar in such a scenario? I think that’s the market’s fear”, Ades elaborated.

Following today’s BCRA announcement, President Javier Milei clarified that the swap is intended for debt payments. “If we can’t access the capital market because country risk remains very high, we will make the 2026 payments using the swap line, and that would be borrowing to pay off debt. Therefore, that is its purpose: to provide security to those who invested in Argentina“, he reiterated.

“Clearly, the market has a reading that the foreign exchange market is out of balance and is willing to absorb whatever the Treasury sells. On the other hand, it’s evident that the Treasury’s interventions are more about providing liquidity and preventing the exchange rate from rising excessively than about lowering it“, economist Guillermo Mondino, a professor at Columbia University in New York and investment fund advisor, explained to Media Reporters.

“They’ve been validating an exchange rate increase toward the top of the band. It’s as if they’re supporting a gradual, but upward movement in the exchange rate, trying to avoid it being abrupt. At this rate, we could reach the top of the band by the end of the week. It’s worth asking whether they’ll continue to ‘facilitate’ this gradual repricing next week“, Mondino said, after the election results are known.

Furthermore, Mondino said, “there they can reshuffle and deal again. Maybe they’ll stay the same, maybe they’ll review their strategy. In the meantime, they’ll slowly move the exchange rate a little bit every day, if the market pushes them“.

A portfolio manager in New York who has expertise in international affairs has attributed the swap announcement to be good news, but at the same time has cautioned that investment funds, banks, insurance companies, multinational companies with operations in Argentina, and individuals who want to dollarise their portfolios and reduce their exposure to Argentine risk know that dollar support, even technical support, doesn’t necessarily win elections. In any case, he noted that the aid planned by Bessent, one of the most influential officials in Donald Trump’s administration, could pressurise Milei to form some kind of broader coalition government, which can be one of the Washington’s demands in the face of the post-election scenario. Last Tuesday, during a meeting with the President at the White House, the Republican leader expressed a condition of the aid depending on the election result.

However, economist Alberto Ades has asserted that, “We’ll have to wait until Sunday to see the election results. The most important thing will be to compare the performance of the segments of the political spectrum with which the government will never negotiate, that is, the Kirchnerists, versus the sectors with which it can negotiate. That’s what the market will be looking at”.

Team Maverick