Argentine President Javier Milei meets with supporters on the 17th (local time). Reuters=Yonhap News. 

The Central Bank of Argentina announced on the 20th (local time) that it had officially signed a currency swap agreement with the U.S. Treasury authorities, potentially worth up to $20 billion (approximately 28.4 trillion won) to stabilize the exchange rate.

In a press release, the Central Bank of Argentina explained, "This agreement is for the macroeconomic stability of Argentina, with a particular focus on price stability and fostering sustainable economic growth." It added, "It will strengthen monetary policy and enhance the Central Bank's capacity to respond to potential volatility in foreign exchange and capital markets."

Previously, U.S. Treasury Secretary Scott Bessant announced on X (formerly Twitter) on the 9th that the Treasury had finalized a $20 billion currency swap agreement with the Central Bank of Argentina.

However, the specific timing of the agreement's finalization had not been publicly disclosed until now.

The agreement was reached six days before Argentina's midterm elections.

The election on the 26th, which will elect 24 senators (one-third of the total 72) and 127 deputies (approximately half of the total 257), can be seen as a "midterm report card" for President Javier Milei, who is halfway through his four-year term since taking office in December 2023, and a crucial test that will significantly influence his future governance.

Given that U.S. President Donald Trump, while expressing support for President Milei, considered a "key ally" in South America, also commented that "it would be difficult to help Argentina if they lose the election," there had been speculation in Argentina about the timing of the swap's activation.

Former Argentine President Cristina Fernández greets supporters while under house arrest. Reuters=Yonhap News. 

According to reports from local media such as Clarín and Perfil, the Argentine government had requested the U.S. to finalize the swap agreement before the midterm elections.

This is interpreted as the ruling party in Argentina hoping for a "tailwind from the U.S." to reverse the unfavorable trend in public opinion polls, where they are trailing the opposition.

However, the Argentine market responded with indifference.

The Argentine peso's exchange rate against the dollar rose, while the MerVal stock index and bonds experienced declines.

Local daily La Nación reported that "the relevant factors had already been diluted in the market," and the fact that it could not be considered direct budgetary support from the United States also failed to stimulate investor sentiment.

In this context, President Milei linked the background of the swap agreement to the shortcomings of the opposition party, seemingly trying to stimulate votes in the midterm elections.

In an interview with the Tucumán regional TV station Canal 8, he stated, "The swap will only be activated when necessary, and will be used to borrow money to repay debt if it becomes difficult to access capital markets due to high country risk," emphasizing the national debt accumulated before his administration.

Argentina, with a modern history marked by extreme economic crises and hyperinflation, is the International Monetary Fund's (IMF) largest debtor. According to the IMF's website, the outstanding and non-reimbursed amount, including Special Drawing Rights (SDRs), stood at $41.789 billion (approximately 59.4 trillion won) as of September 30.

Regarding suspicions from some quarters that Argentina would "sell off national resources to the U.S. in return," President Milei dismissed them as "lies" from leftist supporters, stating, "Thieves believe everyone else is like them."

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