Any questions about the dimension of the support that the United States has decided to give Argentina has been clear. The secretary of the Treasury, Scott Besent, announced on Wednesday, before the opening of the markets, which (a currency exchange line) of 20,000 million dollars to reinforce the reserves of the Central Bank, the purchase of bonds of the Argentine debt and “an important credit stand-by Through the exchange stabilization fund, ”whose figure did not specify.” Argentina has the tools to defeat speculators, including those who seek to destabilize Argentine markets for political purposes, “Besent said on their social networks, implying that Washington could react if they repeat themselves from the South American country last week.
The Treasury announcement comes a day after it is celebrated in New York. The Republican had said in the previous meeting that the Argentine was “a truly fantastic and powerful leader for the great people of Argentina”, which has advanced “at all levels at a record speed.” Trump had also offered Milei “a complete and total support” for his “re -election as president”, although there are still more than two years for the generals.
Yesterday, and I spoke extensively with President and his senior team in New York. As President Trump has stated, we stand ready to do what is needed to support Argentina and the Argentine people.
Under President Milei, Argentina has taken important strides…
— Treasury Secretary Scott Bessent (@SecScottBessent)
Milei’s times are rather short: on October 26 there are national legislative elections and a defeat could be devastating for the confidence of the markets to their adjustment model. The Argentine president is clear about what could happen since September 7, when in the province of Buenos Aires and the weight and bonds of the country were under fire. The attacks ceased this Monday, when the United States made it clear that it was willing to do “whatever necessary” to support Milei.
Besent now gave concrete clues about the help that the US is willing to offer. He swaP of 20,000 million dollars is the most concrete. From that sum you will have to discount the 5,000 million dollars from the line that Buenos Aires has with China. That Argentina cancel that swap It is a priority for Washington, which since Trump’s arrival at the White House has undertaken a campaign that puts limits to Beijing’s regional influence. Help to Milei is part of that much broader strategy.
The purchase of Argentine debt bonds in dollars is another of the rescue pillars, although Besent clarified that the negotiation will begin after the October elections. It is not clear how conversations would affect a defeat or a triumph of Milei. If Peronism wins again, Argentina expects months of great economic instability.
Milei’s adjustment, based on fiscal surplus and inflation control through an appreciated weight and zero emission, caused a liquidity crisis. The Central Bank has its red reserves and the fear that Argentina could not meet its debt payments accelerated after the electoral defeat against Peronism. Bond holders hurried and the government between Wednesday and last Friday to sustain the value of the weight.
Trump’s stretch hand came to placate the storm. The Minister of Economy of Argentina, Luis Caputo, was the first senior official to react to Besent’s message. “What can be added more than thank you secretary Scott Besent. Argentines, a new era begins. To work all together to make our big country again! ”, He wrote, exultant, in his social networks. Minutes later, Milei thanked Trump’s gesture with unusual moderation.” Thank you President @realdonaldtrump and Mr. Secretary (Make America Great Again) Trump’s war cry.
The first evidence that the markets enthusiastically received Besent’s announcement was the collapse of the Argentine country risk, that is, the differential that pays for their debt on the interests of that of the United States, and a rise in debt bonds. “The support surprised by its magnitude. As expected, the market reacted with the rise given the sudden reversal of expectations,” says Pablo Waldman, commercial manager in Balanz. “Only on Monday, sovereign bonds in dollars with New York legislation flew up to 18% and S&P Merval climbed 17% measured in dollars. And the rally He continued both yesterday and this Wednesday, reversing what was a true ‘black week’, he explains.
The country risk index, prepared by JP Morgan, fell from just over 1,000 points at the end of Tuesday to 839 points in today’s opening, almost 18% less. It is still far from the 500 points a year ago, but it is a remarkable improvement with respect to the 1,500 points it had reached on Friday, in full speculative attack. Towards the future, “the market will be attentive to the details of the agreement and its implementation,” warns Waldman, “in just over a month the national legislative elections will occupy the center of the scene and will undoubtedly mark the course of the remaining two years for libertarian management.” Milei’s fate depends on the polls, but now also on Trump.
