Argentina’s financial markets rallied on Monday after President Javier Milei’s party outperformed expectations in the country’s legislative elections, reigniting investor optimism about his reform agenda.
The stronger-than-forecast results offered a crucial boost to Milei’s ability to implement deep economic changes in one of South America’s most volatile economies.
Argentina’s sovereign bonds surged to record highs, while the peso stabilised, reflecting renewed faith in the administration’s fiscal overhaul and in the ongoing financial support from the United States.
Election victory fuels reform momentum
With more than 90% of votes counted, Milei’s coalition secured about 41% of the total, taking 64 of the 127 contested seats in the lower house and 13 of the 24 available in the Senate.
The result outperformed forecasts that had expected the ruling bloc to capture only about 30% of the vote.
The outcome is significant because it strengthens Milei’s control of Congress, giving his government the political backing to advance economic liberalisation, austerity measures, and deregulation plans.
The immediate market response underscored the importance of political stability to Argentina’s reform narrative.
Dollar-denominated bonds due in 2035 jumped more than 13 cents, reaching 70.34 cents on the dollar, a record high.
The rally was the steepest among emerging-market peers, driven by hopes that the government would now accelerate structural changes and unlock new sources of capital.
US-backed financing strengthens investor confidence
Investor optimism was further supported by ongoing collaboration between Buenos Aires and Washington.
Prior to the vote, the US Treasury had signed a $20 billion swap line with Argentina’s central bank to stabilise the peso and was in talks with international lenders about an additional $20 billion in financing.
That support appeared at risk if Milei failed to consolidate power, but his victory reassured markets that Washington’s backing would likely continue.
US officials had indicated their commitment was tied to the administration’s reform progress.
With Milei’s legislative gains, Argentina’s access to foreign liquidity and credit channels looks more secure.
The renewed confidence is expected to help narrow sovereign bond spreads and stabilise domestic borrowing costs.
Peso recovery and debt-market resilience
The Argentine peso, which had been under pressure in recent weeks, showed early signs of stabilisation in crypto markets on Sunday night as partial election results began to emerge.
Investors viewed the vote as a sign of reduced political risk, prompting a reversal of bearish currency positions.
The broader debt market also rebounded after a month of heavy losses triggered by concerns over Milei’s ability to pass reforms.
Yields on long-dated sovereign notes had previously surged above 17%, and the peso had fallen nearly 7% in a single session.
The latest rebound signals renewed faith in Argentina’s policy trajectory and its relationship with the International Monetary Fund, whose support remains essential for maintaining external financing.
Challenges remain despite improved sentiment
While markets celebrated the election outcome, underlying economic challenges persist.
Argentina continues to face annual inflation above 250%, a fragile fiscal position, and limited foreign-exchange reserves.
Experts note that turning electoral momentum into legislative progress will be crucial.
The success of Milei’s agenda now depends on the swift execution of spending cuts, tax reforms, and monetary adjustments designed to rein in inflation and restore competitiveness.
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