Big win in midterm vote for Argentina’s President Milei boosts markets and vindicates Trump

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.

The chronically depreciating Argentine peso – which international investors and Argentine depositors were dumping in droves just last week to hedge against a Milei defeat – soared more than 10% to trade at over 1,300 per dollar on Monday.

The price movements – signaling that investors were recovering confidence in Argentina – validated 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.”

Perhaps never in history has a limited Argentine legislative election generated so much interest in Washington and on Wall Street. 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.

Over the past month, Argentine markets have floundered as the country faced a severe cash crunch. A landslide local election win for the left-leaning populist opposition 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 nearly 1,500 against the dollar.

But in the end, Milei’s La Libertad Avanza party on Sunday triumphed over Argentina’s Peronist coalition, which won just 32% of the national vote in the lower house, compared to Milei’s 41%. Argentina’s dollar-denominated bonds set to expire in 2035 jumped over 10 cents on the news after markets opened.

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 ranchers have chafed at Trump’s promises to buy Argentine beef to bring down U.S. prices. Farmers have voiced anger at rival Argentine farmers replacing them as key soybean suppliers to China after Trump’s pledges of financial support allowed Milei to briefly scrap export duties.

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. had a strategic stake in Argentina’s economic stability.

On Monday, Trump implied that the market rally over Milei’s victory had, at least so far, 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.”

____

Follow AP’s coverage of Latin America and the Caribbean at https://apnews.com/hub/latin-america