Recent reports indicate that the Trump administration is intensifying its support for the government of Argentina under President Javier Milei. On October 15, U.S. Treasury Secretary Ben S. Bernanke revealed plans for a new $20 billion private sector financing tool aimed at bolstering Argentina’s debt market. This initiative will operate alongside a previously announced $20 billion currency swap agreement, bringing the total U.S. assistance to approximately $40 billion for the month.

Bernanke also disclosed that the U.S. Treasury purchased Argentine pesos in the spot market again on Wednesday, marking the second intervention in less than a week to support the peso. Following this news, Argentina's sovereign bonds maturing in 2035 saw a nearly $0.02 increase during trading, rising above $0.59. The Argentine peso's exchange rate managed to recover some of its losses, with the dollar against the peso momentarily rising by 2.6% before experiencing slight fluctuations.

This assistance package comes at a critical juncture for Argentine assets. A day prior, President Trump stated that U.S. aid is contingent upon Milei's performance in the upcoming midterm elections on October 26, causing market volatility. Argentine officials have reiterated that U.S. support is secured until the end of Milei’s term in 2027, although Trump did not clarify this point.

The new financing tool has been in the works for several weeks, emphasizing private sector involvement.

Bernanke noted that the $20 billion private sector financing tool has been under preparation for “several weeks,” designed to assist Argentina with upcoming debt payments. He characterized it as a “solution for the private sector to the forthcoming debt obligations of Argentina,” indicating interest from several banks and sovereign funds.

Media reports suggest that Bernanke characterized the new tool as a complementary arrangement to the currency swap agreement. Overall, this new initiative could bring total U.S. support to Argentina to about $40 billion. Bernanke confirmed that the U.S. Treasury made another purchase of Argentine pesos earlier in the day, marking the second direct market intervention in less than a week following the initial action last Thursday.

Last week’s first intervention involved the finalization of the $20 billion currency swap framework between the U.S. and the Central Bank of Argentina, as announced by Bernanke on social media on October 9. He emphasized the urgency of the action in support of President Milei’s economic reforms. This direct intervention by the U.S. Treasury is the first since 2011.

The announcement had an immediate positive impact, with Argentina's sovereign bond for 2035 rising by $0.043 on that day to above $0.60, the highest level in two weeks. The peso also appreciated by 0.7% against the dollar, rebounding from a prior decline of up to 2.7%. Bernanke described Milei's reform agenda as “systemically important,” asserting that a strong and stable Argentina aligns with U.S. strategic interests.

Trump’s linkage of assistance to electoral performance has introduced further uncertainty. During a White House meeting with Milei on Tuesday, Trump stated that the continuation of the $20 billion currency swap agreement directly hinges on Milei's success in the upcoming elections. He remarked, “If he loses, we will not be generous to Argentina,” and added, “If he doesn’t win, we will pull back.”

This assertion has caused market fluctuations; the Argentine Merval Index fell over 4% on Tuesday, and previously rising Argentine dollar bonds reversed direction, with the 2035 maturity dollar bond dropping nearly $0.03 to around $0.57.

On Tuesday, Bernanke remarked that establishing “economic bridges” with allies and “ultimately cooperating with those doing the right thing” is far preferable than “having to shoot drug smuggling boats.” He stressed that strong policy is a prerequisite for U.S. aid, suggesting that a return to the failed policies of the Peronist era would prompt a reevaluation from the U.S.

While Bernanke announced last week that the swap agreement was finalized, Argentine Economy Minister Luis Caputo acknowledged on Tuesday in Washington that the details of the agreement are still being finalized.