NEW YORK (Reuters) -Argentina's financial assets rallied for a third day on Wednesday after U.S. Treasury Secretary Scott Bessent detailed a massive support for Argentine President Javier Milei's right-wing government and the country's markets.

Bessent said the U.S. was in negotiations over a $20 billion currency swap line with Argentina's central bank, and said it was prepared to purchase Argentina's dollar-denominated bonds on the secondary market.

"Argentina has the tools to defeat speculators, including those who seek to destabilize Argentina's markets for political objectives," Bessent said, reaffirming the political connection to the U.S. support. Bessent on Monday said the administration was seeing a shift to the right in Latin American politics when he teased the U.S. backing of Milei's project.

Argentina's 2030 bond rose over 4 cents in price to trade at 75.36 cents on the dollar, while the Global X Argentina stocks ETF added over 4%, with some bank stocks logging double-digit percentage gains. The local stock benchmark rose over 6% in early trading.

The local peso strengthened near 3% on the day, taking the weekly gains versus the U.S. dollar above 10%.

"This degree of U.S. support for Argentina was beyond what any analyst could have imagined just a few weeks ago," said Alejo Czerwonko, CIO for emerging markets in the Americas at UBS. "It stands among the strongest examples of U.S. Treasury backing in the history of emerging markets."

Markets in Argentina were flashing a panic sign for weeks, after Milei's party suffered a bruising defeat in local elections in the populous Buenos Aires Province. That added to accusations of corruption inside Milei's circle, including his sister and close confidant Karina Milei. Argentina goes to the polls on October 26 for legislative midterm elections, in which Milei's party aims to gain seats to strengthen its minority position.

Bonds had fallen as much as 20% for the year as of last week and the local peso was hitting against the weaker limit of a band set in place in April, in connection with a $20 billion program approved by the International Monetary Fund. The central bank had to burn over $1 billion last week in defence of the currency.

But this week the rebound has been dramatic, after Bessent said Monday the U.S. would do whatever it takes to support Milei and Argentina's reforms. 

"It's hard to know if this will influence the midterm results but certainly it improves Milei's negotiating power with governors and offers the country more firepower to defend itself in the case of an adverse outcome," said Aaron Gifford, senior EM sovereign analyst at T. Rowe Price.

He said Argentina's macroeconomic fundamentals are not concerning despite a dip in overall growth, while FX reserves accumulation, a main concern, should be covered by the U.S. support.

"Tail risks have been significantly reduced, and the rally should continue at least in the near term," he said.