Argentina has fully repaid the funds drawn under its $20 billion currency swap with the US Treasury, signaling a significant recovery from the market turmoil that threatened President Javier Milei’s government last year. The repayment comes as Milei consolidates his position following a midterm election victory and renewed investor confidence.
US Treasury Secretary Scott Bessent confirmed on X that Argentina had “quickly and fully repaid” a $2.5 billion tranche of the swap facility it drew on in October. He noted that the Exchange Stabilization Fund, which conducted the transactions, “currently does not hold any pesos” and that the operations generated “tens of millions in profit for Americans.”
The swap line, approved by the US Treasury for Argentina’s cash-strapped central bank, was coupled with direct intervention in the country’s exchange market to support the peso. Bessent described the repayment as proof that “our ESF actions worked precisely as Congress intended,” adding that “a strong and stable Argentina that helps anchor a prosperous Western Hemisphere is in our clear best interest.”
The emergency support came amid severe market turmoil in October, when fears that Milei would lose the midterms and exhaust his dollar reserves triggered a run on the peso. US assistance allowed Argentina to avoid an abrupt devaluation ahead of the vote. Milei went on to secure an unexpectedly large victory, defeating the leftwing Peronist opposition by nine percentage points and more than doubling his congressional bloc.
Since the repayment, the peso has strengthened about 2 percent compared to pre-election levels, while Argentine sovereign bonds have surged as investor confidence grows in Milei’s free market reforms. The country’s interest premium over US Treasuries, a measure of debt risk, has halved since the midterms to 5.65 percent.
Despite these gains, Argentina’s hard currency reserves remain limited, largely composed of loans and other liabilities, totaling roughly $44 billion. The central bank recently concluded a $3 billion repurchase agreement with international banks and made a $4.2 billion payment to bondholders, while also announcing plans to purchase around $10 billion in reserves during 2026. Economists caution that rebuilding reserves is crucial for sustaining debt repayment, import financing, and peso stability.
Gabriel Caamaño, an economist at Buenos Aires consultancy Outlier, said the US intervention “fulfilled its objective” by stabilizing the exchange rate before the elections, though questions remain about the source and terms of the funds Argentina used to repay the Treasury.
