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 20% 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 on its close ideological ally in South America.
“He had a lot of help from us,” U.S. President Donald Trump told reporters on Air Force One Monday, referring to $40 billion in promised U.S. support to help Milei avert a currency crisis. “He’s working against 100 years of bad policies, and he’s going to break them, thanks to support from the United States.”
After decades of populist governments in Argentina printing money to finance unbridled spending and running up massive budget deficits, Milei has shrunk the government’s bureaucracy, slashed the public payroll and deregulated the economy. His brutal cost-cutting measures have inflicted painful job losses and eroded purchasing power but also tamed runaway inflation.
Trump raised the stakes of the vote earlier this month when he threatened to rescind the financial lifeline if Milei’s party lost to the left-leaning opposition.
Perhaps never in history has a limited Argentine legislative election generated so much interest abroad — in Washington and on Wall Street.
As far away as Israel, the government congratulated Milei, comparing the Argentine’s victory in Congress to its own on the battlefield.
“We have a saying in our brave military: Who dares — wins,” Israeli Prime Minister Benjamin Netanyahu said. “You dared, you won.”
Markets are exuberant
Over the past few weeks Argentina markets have floundered as the country faced a severe cash crunch. A landslide local election win for the left-leaning populist opposition last month raised fears that Argentines were losing patience with Milei’s harsh austerity measures.
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 on Sunday scored nearly 41% of the national vote for the lower house, triumphing over the Peronist coalition that won 32%.
On Monday, Trump implied that the market rally over Milei’s victory had 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.”
Concerns build over US rescue of Argentina
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 his political allies at a time when federal workers aren’t getting paid due to 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 at U.S. support for a rival agricultural exporter.
Even core Trump supporters have expressed worries over the lifeline, seeing it as at odds with the president’s “America First” doctrine.
Trump and U.S. Treasury Secretary Scott Bessent have brushed off the criticism and insisted that the U.S. has a strategic stake in Argentina’s economic stability.
Milei’s tiny party grows, though still short of a majority
It was mathematically impossible for La Libertad Avanza to win a congressional 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 upper house, the Senate.
In sweeping six out of eight provinces that voted for senators and securing over a third of the seats in the lower house, Milei and his allies no longer need to worry about opposition lawmakers overturning presidential vetoes of spending measures and jeopardizing the government’s prized fiscal balance — as has repeatedly happened over the past month.
Nor is Milei in danger of potential impeachment, nor of Congress blocking his contentious emergency decrees to overhaul large swaths of the economy.
But experts warned that without a majority, Milei still needed to ditch his go-it-alone strategy in Congress and build coalitions if he wanted to see through big reforms. With billions of dollars in debt coming due next year, the legislative gains do nothing to solve Argentina’s chronic shortage of foreign exchange reserves.
“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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