Big win in midterm vote for Argentina's President Milei boosts markets and vindicates Trump
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1:48 PM on Monday, October 27
By ISABEL DEBRE
BUENOS AIRES, Argentina (AP) — Markets in Argentina rallied, the peso surged and the country's sovereign bonds jumped on Monday as libertarian President Javier Milei hailed his party's resounding victory in midterm congressional elections as a mandate to press forward with radical free-market reforms.
Investors recovered confidence in the chronically depreciating Argentine peso that they were dumping in droves just last week to hedge against a Milei defeat. The currency surged more than 10% to trade at over 1,300 per dollar on Monday. Argentine stocks soared up to 40% during the trading day and the country's dollar-denominated bonds set to expire in 2035 climbed over 10 cents after markets opened.
The price movements over Milei's party doubling its representation in Congress appeared to validate the Trump administration’s bet that its close ideological ally can transform Argentina after decades of left-leaning populism.
“He had a lot of help from us," U.S. President Donald Trump told reporters on Air Force One on Monday, referring to $40 billion in promised U.S. support for Argentina and his threats to rescind the money if Milei lost the vote.
“He's working against 100 years of bad policies, and he’s going to break them, thanks to support from the United States."
Perhaps never in history has a limited Argentine legislative election generated so much interest abroad, both in Washington and on Wall Street. Congratulations also poured in from Milei’s right-wing allies further afield, from Italian Prime Minister Giorgia Meloni to Israeli Prime Minister Benjamin Netanyahu.
“We have a saying in our brave military: Who dares — wins,” Netanyahu said. “You dared, you won.”
Since coming to power on a pledge to take a chain saw to state spending two years ago, Milei has cut government red tape, slashed the public payroll and deregulated the economy.
His brutal cost-cutting measures have inflicted painful job losses and eroded purchasing power for millions of Argentines. But the program also tamed runaway inflation.
Before Sunday, Milei found himself on uncertain ground as Argentine markets floundered and the country headed toward a cash crunch after a landslide local election win for the opposition raised fears that Argentines were losing patience with Milei’s harsh austerity.
Alarmed that Argentina could return to the budget-busting populism of its long-dominant Peronist opposition, investors rushed to pull their money out of the country as analysts predicted a tough slog for Milei in the midterms. The Argentine peso plunged to a record low of over 1,500 against the dollar last week.
But in the end, Milei’s La Libertad Avanza party emerged with nearly 41% of Sunday's national vote for the lower house, triumphing over the Peronist coalition that won 32%.
The burst of optimism in markets had no immediate effect on ordinary Argentines, but Trump suggested it offered a windfall to American investors and fund managers.
“The bonds have gone up, their whole debt rating has gone up,” Trump said. “That election made a lot of money for the United States.”
The political backlash against Trump's huge U.S. rescue package for Argentina has been mounting for weeks.
Democrats on Capitol Hill have seized on the assistance to attack Trump, accusing the president of showering money on a political ally at a time when federal workers aren’t getting paid amid the government shutdown.
American cattle ranchers have chafed at Trump’s promises to buy Argentine beef to bring down U.S. prices. Farmers squeezed by the Trump administration's trade war with China have voiced anger over the U.S. backing a rival agricultural exporter. Even core Trump supporters have expressed worries over the aid, seeing it as at odds with the president’s “America First” doctrine.
Experts say that the Trump administration has created a worrying precedent by tapping the Treasury's Exchange Stabilization Fund to bail out a friendly foreign government.
“The fund is not supposed to be a slush fund for influencing elections or for foreign policy purposes,” said Rohit Chopra, the former head of the Consumer Financial Protection Bureau. “U.S. involvement will continue to put American taxpayers at risk without authorization.”
Trump and U.S. Treasury Secretary Scott Bessent have brushed off criticism, insisting that the U.S. has a strategic stake in Argentina’s economic stability.
It was mathematically impossible for La Libertad Avanza to win a majority in Sunday's elections, which renewed nearly half the seats in the Chamber of Deputies, the lower house of Congress, and a third of those in the Senate.
In appearing to secure over a third of the seats in both houses, Milei and his allies no longer need to worry about opposition lawmakers overturning presidential vetoes and jeopardizing the government's prized fiscal balance — as repeatedly happened in the past month.
But analysts warned that without a majority, Milei still needs to ditch his go-it-alone strategy in Congress and build coalitions if he wanted to see through long-term reforms and solve structural problems like Argentina’s shortage of dollars in the bank. Challenges include billions of dollars in debt coming due next year.
“Milei has enough support now to overturn attempts to derail his agenda but this doesn’t get him out of the woods in any way, shape or form,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics.
"In the short term they'll be OK, they have all this money being thrown in their direction now, but there will come a point where we'll see the same sort of turmoil that we saw a month ago and the question will be, what will the U.S. do?”
When asked that question on Air Force One on Monday, Trump said the U.S. “could consider” extending more financial aid to Argentina.
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Associated Press writer Chris Megerian in Kuala Lumpur, Malaysia, contributed to this report.
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