Milei’s Reform Agenda Gets Boost from Midterm Victory
Argentina’s financial markets saw sharp gains Monday as President Javier Milei’s ruling coalition, La Libertad Avanza, secured a commanding lead in national midterm elections. Investors welcomed the results as a green light for Milei’s ongoing market-oriented reforms.
The peso rose over 6%, strengthening to 1,405 per U.S. dollar, while Argentina’s Merval stock index jumped by 20%. Dollar-denominated sovereign bonds also rallied, with yields falling below 10% — a signal of renewed investor confidence in Argentina’s fiscal direction.
Bondholders Find Relief After Weeks of Uncertainty
Following weeks of currency instability and capital flight, Sunday’s election outcome alleviated fears among creditors that Milei’s administration might run out of foreign reserves. The victory against Argentina’s historically dominant Peronist faction — which earned just 32% of the vote — gives Milei greater political room to pursue restructuring and monetary discipline.
Debt markets responded swiftly. The 2035 bond climbed 12 cents to trade at 69 cents on the dollar, while the 2029 issue jumped to 84 cents — levels not seen since Milei took office in 2023 after a prolonged default crisis.
Market-Friendly Narrative Stabilizes Currency Outlook
Analysts note that the decisive vote allows Milei to govern from a position of strength, delaying or possibly avoiding a sharp currency devaluation that had been widely anticipated.
“There’s now less pressure to devalue,” said Carmen Altenkirch of Aviva Investors. “Local investors who hedged with dollars may now begin to de-dollarize, giving the central bank breathing room to rebuild reserves.”
Even with net reserves deep in the red, Argentina’s central bank had been holding the peso within a narrow range with support from a $40 billion U.S.-backed package — a mix of public and private sector funding aimed at stabilizing markets.
Reforms Expected, but Timing Unclear
While the election results offer Milei political cover to accelerate structural reforms, economists caution that the implementation timeline remains uncertain. Some predict adjustments to Argentina’s official peso trading band, while others expect broader currency liberalization in 2026, contingent on rising foreign investment and improved reserves.
“The government has earned some space to adjust on its own terms,” said Daniel Lansberg-Rodriguez of Aurora Macro Strategies. “But lasting reform will demand political discipline and tolerance for short-term pain — traits rarely sustained in Argentina.”
U.S. Signals Support for Milei’s Economic Direction
U.S. Treasury Secretary Scott Bessent voiced encouragement following the results, emphasizing Washington’s support for Argentina’s pro-market path. While specifics on disbursement remain limited, the broader message suggests backing for policies that attract private capital and restore fiscal health.
Related Coverage
- Global News – https://idahonews.co/global-news/
About the Author
