Citigroup Inc sold Argentine pesos to the Federal Reserve on Thursday as part of US Treasury Secretary Scott Bessent’s wide-ranging effort to buoy the currency and Javier Milei’s administration, according to people familiar with the matter.
The Fed acted as a fiscal agent on behalf of the Treasury, the people said, asking not to be identified discussing the confidential dealings.
Bessent’s Treasury is buying the beleaguered currency from or through banks as the two nations continue negotiating details of a US$20-billion swap line with the Treasury, part of a sweeping rescue package as Milei faces midterm elections October 26.
Semafor separately reported that banks including Citigroup, JPMorgan Chase & Co, Goldman Sachs Group Inc and Bank of America Corp are in talks with the Treasury for US$20 billion of emergency loans to Argentina backed by local assets.
Citigroup sold pesos to the Fed in other trading sessions, too, including last week, according to one of the people. And Banco Santander SA has continued to buy pesos in Argentina’s local market on behalf of the Treasury, another person with direct knowledge of the matter said.
It wasn’t clear how much was bought or sold by either institution.
Spokespeople for the Fed, Treasury, US banks and Santander’s press office in Buenos Aires either declined to comment or didn’t immediately respond to messages seeking comment.
The peso slid to as weak as 1,424 per US dollar mid-session Thursday before rebounding in the final half hour of trading when dollars were offered in the local market around 1,410 and 1,400, according to two people with direct knowledge of the situation who asked not to be identified discussing private operations. It wasn’t clear which institutions had made those offers.
The Treasury’s moves are aimed at meeting persistent dollar demand from savers and investors ahead of the election. Many Argentines are convinced that even a flood of US cash won’t halt another painful devaluation. Bessent has tried to counter that view by stepping in to buy the peso, calling it “undervalued,” and weighing a plan to double Argentina’s rescue package to $40 billion via a private arrangement with international banks.
Argentines’ shift out of pesos began months ago and has accelerated: They bought a net US$18 billion in the five months through August, or about US$400 per resident, according to Central Bank data.
After an initial bounce the week of September 22, when Bessent first pledged support, the peso resumed its slide and has lost ground against the dollar in most sessions since September 29.
Confidence in US backing was also dented this week when US President Donald Trump signalled he would withdraw support if Milei’s party loses the midterms, a new condition after the libertarian’s candidates got wiped out last month in key provincial vote. That loss fuelled investors’ concerns that his free-market agenda could stall after the legislative vote.
by Patrick Gillespie, Todd Gillespie & Ignacio Olivera Doll, Bloomberg
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