U.S. support buys time, not permanent stability, for Argentina

ARGENTINA - In Brief 13 Oct 2025 by Joaquin Cottani

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Despite the U.S. Treasury’s recent show of support, Argentina’s markets remain uneasy. The mere announcement two weeks ago that Washington was willing to offer financial assistance did little to restore confidence. After a brief period of calm, both the exchange rate and country risk climbed again last week—forcing a stronger response. The U.S. Treasury not only issued a more formal statement confirming the promised $20 billion swap line with the Central Bank of Argentina (via the Exchange Stabilization Fund) but also intervened directly in the foreign exchange market, purchasing pesos through three international banks: Santander, JPMorgan, and Citi. Following these actions, Economy Minister Luis Caputo told the press that the U.S. Treasury was ready to do whatever was necessary to prevent the peso from breaching the upper limit of the exchange band before and after the elections. He even suggested that, if needed, Washington would purchase Argentine dollar bonds in the secondary market to support their prices. This coordinated effort helped bring the country risk below 1,000 basis points and stabilized the peso more firmly than the previous week—just below the band’s ceiling, currently around ARS 1,490 per USD, which adjusts by 1% per month. These measures reduce—but do not eliminate—the likelihood of another run on the peso or Argentine bonds before the October 26 midterm elections. Uncertainty about post-election policy still looms large. As I have argued for some time, and contrary to Minister Caputo’s efforts to manage expectations, it is unlikely that Argentina’s monetary and exchange rate policies will remain unchanged after the elections. The current exchange b...