Argentina’s Peso Gains on Milei Midterm Victory, Hinting at Reform Progress

• Milei’s La Libertad Avanza party won 41.5% in Buenos Aires province, narrowly defeating the Peronist coalition’s 40.8%, a historic shift in long-held opposition territory.

• National support for Milei exceeded 40%, reflecting voter approval of free-market reforms and austerity measures implemented since he took office nearly two years ago.

• Argentina’s 2038 international dollar bond reached 74 cents on the dollar, while U.S.-listed Argentine stocks rose up to 50%, and the Global X MSCI Argentina ETF gained 22%, reversing earlier yearly losses of 10.2%.

Argentina’s midterm victory boosts markets: Peso surges 10%, bonds rally amid Milei reforms. Discover how this election impacts global investors and economic stability—read now for key insights.

What Impact Did Argentina’s Midterm Election Results Have on Financial Markets?

Argentina’s midterm election results triggered a robust market rally, as investors reacted positively to President Javier Milei’s strengthened position. International bonds advanced significantly, local equities soared, and the peso appreciated sharply against the dollar, marking one of the currency’s strongest sessions in recent history. This response underscores confidence in the continuity of Milei’s economic reforms, which are linked to substantial U.S. financial support.

How Did La Libertad Avanza’s Victory Shift Legislative Dynamics?

La Libertad Avanza’s midterm gains provided President Milei with enhanced leverage in Argentina’s legislature, enabling better negotiation for key reforms. Official data indicates the party secured 41.5% of votes in Buenos Aires province, surpassing the Peronist coalition’s 40.8%—a breakthrough in a region dominated by Peronists for decades. Nationally, Milei’s support topped 40%, affirming public backing for the free-market policies and austerity measures enacted nearly two years ago. These reforms have contributed to slowing inflation, despite their contentious nature and economic hardships. Thierry Larose, a portfolio manager at Vontobel Asset Management, highlighted the unexpected scale of the win, stating it transitions Milei from a survival mode to a position ripe for forming alliances and advancing previously stalled initiatives. Christine Reed, an emerging market fixed income portfolio manager at Ninety One, observed that Milei’s victory speech adopted a cooperative stance, suggesting willingness to collaborate with non-party lawmakers. This approach is crucial, as structural economic changes will require broader legislative support. Recent events, including a provincial loss last month and a 25% peso depreciation since April’s foreign exchange liberalization, had heightened volatility. The currency had weakened nearly 30% year-to-date, dipping to 1,491.50 per dollar last week, even after U.S. Treasury Secretary Scott Bessent’s late September confirmation of support. The election outcome has alleviated these electoral risks, opening pathways for accelerated restructuring.

Frequently Asked Questions

What Are the Key Market Reactions to Milei’s Midterm Win?

The markets responded decisively to President Milei’s midterm victory, with Argentina’s international bonds gaining 10-15 cents and the 2038 dollar bond climbing to 74 cents on the dollar. Local shares increased over 20%, U.S.-listed Argentine banking stocks rose up to 50%, and the BKAR index of such equities surged 40%. The peso strengthened more than 10% against the dollar, fueled by optimism over reform continuity tied to a $40 billion U.S. package, including a $20 billion swap line and potential loan facility.

Why Is the Peso’s Strength Significant for Argentina’s Economy?

The peso’s recent strengthening after the midterm elections signals reduced political uncertainty and bolsters prospects for foreign exchange reforms. It could initiate a virtuous cycle where locals sell hoarded dollars, aiding reserve buildup, though reserves remain low. Investors like Graham Stock from RBC BlueBay Global Asset Management emphasize using this momentum to accumulate dollars under the current regime, extending appeal for investments ahead of 2027 elections.

Key Takeaways

• Milei’s Electoral Success Enhances Reform Momentum: The victory provides legislative leverage for pushing free-market policies, with national support over 40% validating austerity efforts that have slowed inflation.
• Market Rally Reflects Investor Confidence: Bonds, stocks, and the peso all advanced sharply, reversing recent declines and tying into U.S. support conditional on political stability.
• Opportunities for Economic Restructuring: Reduced electoral risks allow faster progress on currency and fiscal reforms, potentially attracting more foreign investment to Argentine assets.

Conclusion

Argentina’s midterm election results have fortified President Javier Milei’s position, driving significant gains in bonds, shares, and the peso while highlighting the interplay between political stability and Argentina’s midterm election results. Legislative leverage from La Libertad Avanza’s wins supports ongoing reforms, including foreign exchange adjustments, amid slowing inflation and U.S. backing. As investors eye the 2027 elections, this development positions Argentina for potential economic recovery—monitor these trends for opportunities in emerging markets.