U.S. Moves Ahead With Argentina Rescue as Farm Bailout Is Delayed

Treasury Secretary Scott Bessent has pledged to support Argentina’s crisis-stricken currency. (Eric Lee/Bloomberg)

The U.S. has finalized crucial details of its planned rescue of Argentina, Treasury Secretary Scott Bessent said Thursday.

“Today we directly purchased Argentine pesos,” Bessent said in a post on X, adding that the U.S. has also finalized plans for a $20 billion currency swap. That arrangement would give Argentina access to U.S. dollars that it urgently needs to support its rapidly weakening currency.

“The U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” Bessent said.

The Argentine economy is relatively small and isolated from the U.S., but President Javier Milei is an ideological ally of Bessent’s. The libertarian Argentine president’s government has taken aggressive steps to allow the free market to take control. That approach has pulled inflation down from 289% in April 2024 to 34% most recently.

But a currency crisis began to unfold in September after local and global investors began to worry that Milei’s party, La Libertad Avanza, could see its already minority standing worsen in a legislative election later this month—which would put pressure on Milei’s ability to restrain spending. Investors began to pull capital out of the country, weakening the peso.

Milei doesn’t allow the currency to float freely. His government has been forced to spend its dwindling reserves of dollars defending the peso.

Bessent said in late September that he would intervene to stabilize the peso to help provide Milei a bridge to the election. Bessent’s remarks briefly stabilized the currency, but the peso began to again slide after negotiations between the U.S. and Argentina appeared to drag on.

Thursday’s announcement was meant to address that slide. The peso gained 0.8% against the dollar Thursday, while Argentine stocks rose more than 5.5%.

The Argentine rescue may not be popular with some Americans: Both the U.S. and Argentina export soybeans and compete with each other on the global market. China has ceased its purchases of U.S. soybeans amid its trade war with Washington, leaving U.S. farmers in a difficult position. Soybean farmers have objected to the U.S. using taxpayer funds to help a competitor while their problems persist.

The Trump administration has promised to aid farmers, but Agriculture Secretary Brooke Rollins said during a cabinet meeting on Thursday that any farm bailout would need to wait for the government shutdown to end. Thursday marked the ninth day of the shutdown, without any sign of a breakthrough.

The U.S. Treasury Department didn’t respond to Barron’s request for comment on how it may be thinking about farmers’ concerns.

Some analysts have speculated that the U.S. may require the Argentine peso to float freely as a condition of the rescue, but Bessent said Thursday that wouldn’t be the case. Argentina’s “exchange rate band remains fit for purpose,” he said.

Argentina has defaulted on its debt under previous governments. Bessent’s announcement didn’t detail any steps to ensure that dollars provided under the swap line would be repaid.

Milei will meet with President Donald Trump on Oct. 14, Bessent said.

Write to Matt Peterson at matt.peterson@dowjones.com