• Argentina signs a $20 billion currency swap deal with the US for economic stability.
• The agreement aims to strengthen Argentina's reserves ahead of midterm elections.
• US support tied to the outcome of the upcoming elections and Milei's economic reforms.

Argentina on Monday formalised a currency swap agreement with the United States for up to US$20 billion, aimed at boosting “economic stability,” according to the South American country’s central bank. This deal, backed by former President Donald Trump's administration, comes just days before Argentina's midterm elections on October 26, amid pressure on President Javier Milei over the country's struggling economy. The peso has recently shown significant volatility, unsettling both households and businesses as inflation concerns rise once again, according to SCMP and India Times.

The agreement is structured to enhance Argentina's international reserves and is part of a strategy to mitigate foreign exchange volatility. Treasury Secretary Scott Bessent mentioned plans for a separate financing initiative worth another US$20 billion through “private banks and sovereign wealth funds” to further support Argentina's economy. Officials from the Central Bank highlighted how the swap deal will provide them with additional monetary policy tools, crucial at a time when the peso has depreciated significantly, according to Reuters and Al Jazeera.

Trump's recent comments suggested American financial aid is contingent on Milei's success at the polls. He stated, “If he loses, we are not going to be generous with Argentina,” potentially influencing voter perceptions and market reactions. The implications of this pact are significant as they may dictate the future of Milei's market-driven reform agenda and Argentina's broader financial landscape. Experts note that the support was linked to Milei's commitment to maintaining strict economic reforms, thus reflecting the intertwining of political outcomes and economic strategies, according to Al Jazeera and Reuters.