Reuters: Argentina’s central bank said on Monday it signed a $20 billion exchange-rate stabilization agreement with the US Treasury Department, six days ahead of a key midterm election.
The central bank’s statement said the agreement sets forth terms for bilateral currency swap operations between the US and Argentina, but it provided no technical details.
The central bank, the BCRA, said: “Such operations will allow the BCRA to expand its set of monetary and exchange rate policy instruments, including the liquidity of its international reserves.”
The Argentine peso closed at a record low, down 1.7% on the day to end at 1,475 per dollar.
The BCRA said the pact was part of a comprehensive strategy to enhance its ability to respond to foreign exchange and capital markets volatility.
The US Treasury did not respond to a request for details on the new swap line and has not issued its own statement about the arrangement.
US Treasury Secretary Scott Bessent said last week the arrangement with banks and investment funds would be backed by International Monetary Fund Special Drawing Rights held in the Treasury’s Exchange Stabilization Fund that will be converted to dollars.
Currency traders said that since the Treasury first purchased pesos on October 9, sales of dollars into the peso market have reached hundreds of billions of dollars, though the source of the selling has not been disclosed.
On Monday, the Wall Street Journal reported that a group of US banks, including JPMorgan Chase, Bank of America and Goldman Sachs, was hesitant to lend $20 billion to Argentina without guarantees or collateral. The banks did not immediately respond to Reuters requests for comment.
