By Susan Heavey, Andrea Shalal and David Lawder
WASHINGTON (Reuters) -U.S. Treasury Secretary Scott Bessent said on Monday that "all options" are on the table for stabilizing Argentina, including swap lines and direct currency purchases, while underscoring President Donald Trump's confidence in Argentine President Javier Milei and his economic team.
Bessent told reporters that any U.S. action would be "large and forceful," but said no steps would be taken until after he and Trump meet with Milei in New York on Tuesday on the sidelines of the United Nations General Assembly.
Asked if Washington could act immediately afterwards, Bessent said: "We'll see where the markets are and what the level of outflows are - or maybe the outflows turn into inflows - but no one should doubt the resolve of this administration, or my resolve."
Bessent refused to be drawn on what specific steps the U.S. could take to support Argentina and calm markets, but said, "I can tell you that it will be large and forceful."
The former hedge fund executive said he did not see a risk of financial contagion from the crisis, underscoring that Washington thought Argentina's implementation of economic reforms was going "quite well." He said the Trump administration hoped to solidify what it sees as a rightward shift in Latin American countries, including potentially Colombia.
NO NEW TERMS OR CONDITIONS FOR US SUPPORT
Bessent first announced U.S. support for Argentina in a social media post, saying all options were on the table.
"These options may include, but are not limited to, swap lines, direct currency purchases, and purchases of U.S. dollar-denominated government debt from Treasury’s Exchange Stabilization Fund," Bessent wrote on X.
He told reporters any U.S. action would not result in new demands or conditions beyond Argentina's continued adherence to the terms of its loan deal with the International Monetary Fund.
"I can't speak for the president, but as far as Treasury is concerned, there's no conditionality," he said.
Argentina signed a new $20 billion four-year loan deal with the IMF in April that required the country to dismantle years-long currency controls and loosen its grip on the peso. Milei is seeking support for his economic policies at a time when financial markets have been roiled by his ruling party's loss in legislative elections in the province of Buenos Aires, signaling growing discontent with austerity.
Argentina's central bank made its largest daily dollar sale in nearly six years on Friday as it continued to use reserves to support the local currency, meeting strong dollar demand from institutional investors wary of political instability.
The bank's latest intervention totaled $678 million, bringing the total amount of dollars sold in the last three sessions to $1.1 billion.
"We remain confident that President @JMilei's support for fiscal discipline and pro-growth reforms are necessary to break Argentina's long history of decline," Bessent wrote on X.
TREASURY SATISFIED WITH IMF'S POSITION ON ARGENTINA
Bessent told reporters that the International Monetary Fund was unable to make adjustments to its Argentina program until after the Argentine election. He said he spoke with IMF Managing Director Kristalina Georgieva over the weekend and was "very satisfied" with the global lender's position.
It was not immediately clear if Georgieva, who is also due to attend the U.N. meetings, would meet with Milei in New York. A spokesperson for the IMF could not immediately be reached for comment on Argentina's situation.
Asked whether he had consulted with Wall Street players or banks on the need for an intervention on behalf of Argentina, Bessent said: "None of this is based on U.S. market positions. They're free to take gains or losses. Our markets team interacts with investors every day on a variety of topics."
Asked if Elon Musk had weighed in at all or played a role in this, given reports that Musk spoke to Trump on Sunday, Bessent said, "not that I know of."
Bessent, asked to explain what triggered the crisis, blamed it on skittish investors with some "muscle memory" from Argentina's previous administration.
"Either there's some risk management or a rush for the exit with the idea that the opposition could do well in the upcoming election," he said, adding that it was unclear if a market "feedback mechanism" would fuel support for Milei or could wind up undermining Argentina's real economy.
(Reporting by Andrea Shalal, David Lawder and Susan Heavey; Editing by Franklin Paul and Andrea Ricci)
