The Central Bank of the Argentinian Republic (BCRA) said it has signed a $20bn exchange rate stabilisation agreement with the United States Treasury Department, six days ahead of a key midterm election.

The central bank’s statement on Monday 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 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 Argentinian peso closed at a record low, down 1.7 percent 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 immediately respond to a request for details on the new swap line and has not issued its own statement about the arrangement.

US Secretary of the Treasury Scott Bessent said last week that the arrangement would be backed by International Monetary Fund Special Drawing Rights held in the Treasury’s Exchange Stabilization Fund that will be converted to dollars.

Bessent has said that the US would not put additional conditions on Argentina beyond President Javier Milei’s government continuing to pursue its fiscal austerity and economic reform programmes to foster more private-sector growth.

He has announced several US purchases of pesos in recent weeks, but has declined to disclose details.

Argentinian Minister of Economy Luis Caputo said last week that he hoped the swap deal framework would be finalised before the October 26 midterm parliamentary vote, in which Milei’s party will seek to grow its minority presence in the legislature.

Source: Aljazeera