Argentina’s political landscape shifted dramatically following President Javier Milei’s party, La Libertad Avanza (LLA), winning a decisive victory in the recent midterm elections held on Sunday. The stakes are high—with results having a major effect on the country’s ongoing economic reforms. They shape its foreign relations with international financial partners, most notably the United States. Nationally, LLA has already guaranteed more than 40 percent of the vote— including a stunning 41.5 percent in Buenos Aires province. As a result, analysts are hopeful that Argentina’s economy is finally on the mend.
If Milei’s party is to maintain electoral success, it has to maintain momentum elsewhere with radical economic reforms. This victory is essential for the future of continued financial commitments from the U.S. The election announcement sent investors into a frenzy, spurring an increase of almost 10% on Argentina’s bonds, stocks and currency. As the markets reacted, Argentina’s international dollar bonds approached historic highs, further solidifying confidence in Milei’s administration.
A Strong Showing at the Polls
La Libertad Avanza had an incredible success in the election. In Buenos Aires province, preliminary results indicate the main opposition Peronist coalition won 40.8 percent of the vote. Nationally, LLA’s result was extraordinary, winning over 40 percent in the aggregate. After analysts expected a much closer contest, winning here would be a defining win for Milei and his nascent party.
“His victory was so, so much larger than expected,” – Thierry Larose
Those electoral results both register a significant change in voter sentiment and reveal increased popular support for Milei’s radical economic policies. His administration is unapologetically pursuing radical reforms to putting stabilize Argentina’s economy for the long haul. The country has been dealing with extreme inflation and a collapsing currency.
Market Reactions to the Election Results
After the news of the election results was made known, Argentine financial markets saw a remarkable revival. Ever since, the country’s international dollar bonds have trailed as one of the worst-performing high-yielders in emerging markets. In 2024 they actually bounced back incredibly, paying back investors more than 100 percent. The most active 2038 maturity bond jumped 13 cents to settle at 73 cents on the U.S. dollar.
Moreover, U.S.-listed shares of Argentine companies have absolutely exploded, with financial stocks such as Grupo Supervielle up as much as 50 percent. On the upside, the Global X MSCI Argentina ETF recovered narrowly with a vibrant 20 percent gain. This increase came on the heels of a 10 percent drop earlier this year. These new advances are testament to the reborn investor bullishness on Argentina’s economic prospects with Milei at the helm.
On Monday, the Argentine peso jumped 13 percent against the U.S. dollar. It recently came close to a historic 1,320 pesos per dollar exchange rate. By day’s end, the peso had regained strength, appreciating by 5.8 percent to approximately 1,410 pesos per dollar. This increase is indicative of an overall optimism around long-term economic prosperity.
Future Financial Strategies and Economic Outlook
With an onslaught of economic reforms already under way, Milei’s government is just getting started. Experts say the key lies in capitalizing on the newly strengthened peso. Graham Stock from T. Rowe Price urged everyone to use this opportunity to establish a base.
“They need to take advantage of peso strength to buy up dollars and build those reserves up, which they can do with the current regime,” – Graham Stock
These things considered, Milei’s administration has a grace period and opportunity to lean further into their newly outlined agenda from a position of strength. Matthew Graves who helped engineer this electoral victory said that this gives the government much more room to maneuver through a varied and complicated economic landscape moving forward.
Ironically, when Milei later delivered his victory speech, his moderate tone betrayed him. He reiterated his willingness to work with legislators outside the LLA to address the need for reforms.
“Critically, Milei’s victory speech was notably moderate and cooperative, signaling willingness to work with non-LLA legislators on reforms,” – Christine Reed
Inflation in Argentina has plummeted since Milei assumed office a little under two years ago. Now the federal government has an opportunity to build on this momentum and lay the groundwork for a more equitable, inclusive, and sustainable long-term economic recovery.
