An armored truck drives past Argentina's Central Bank in Buenos Aires, Argentina April 11, 2025. REUTERS/Irina Dambrauskas

(Reuters) -Argentina's central bank said on Monday it signed a deal for a $20 billion exchange rate stabilization agreement with the U.S. Treasury Department, six days ahead of a key midterm election.

"This deal establishes the terms and conditions for the realization of bilateral currency swap operations between both parties," the statement said.

"It strengthens the central bank's capacity to respond to conditions that can happen in episodes of volatility in the foreign exchange and capital markets."

Economy Minister Luis Caputo said last week he hoped this framework would be finalized before the midterm vote where President Javier Milei's party will seek to grow its minority presence in the legislature.

Milei, who has campaigned to solve Argentina's economic woes through a tough austerity program and dramatically shrinking the size of government, has been handed a string of recent political defeats in face of his more socially focused opposition.

U.S. President Donald Trump said last week the U.S. would not "waste our time" with Argentina if Milei's party loses in the October 26 vote, but Treasury Secretary Scott Bessent later trod back the statements that briefly shocked local markets.

Bessent said the U.S. would continue to support Argentina financially as long as Milei's government pursues "good policies," regardless of the election outcome.

Bessent has meanwhile announced several peso purchases.

(Reporting by Sarah Morland and Brendan O'Boyle; Editing by Alexander Villegas and Chizu Nomiyama)