Argentina: Strong rebound in the market after Milei's resounding legislative victory
The climate of optimism was reflected in the fall of interest rates, the rebound of the stock market and the strong appreciation of the peso against the dollar, dissipating weeks of a run against the Argentine currency.
Argentine President Javier Milei
The Argentine market reacted with euphoria following the resounding victory of the La Libertad Avanza (LLA) party, led by libertarian President Javier Milei, in the midterm legislative elections.
Milei's government obtained on Sunday a strong support from the Argentine people, who backed it with 40.7% of the vote, against Peronism, which was dispersed in several lists, that obtained 31.7% of the ballots.
The electoral triumph of the ruling party paves the way for Milei to advance with labor, social security and tax reforms that he promised for the second half of his term of office, which ends in 2027. The fear of a financial debacle and an inflationary jump should La Libertad Avanza lose weighed as much as backing for the president's policies, according to political analysts quoted by AFP.
Argentina's bond interest rate drops
On Monday, the interest rate on Argentina's 10-year loans fell sharply. It stood at 10.51%, compared with 14.34% recorded on Friday, representing a decrease of 3.83 points, a variation particularly significant in the sovereign debt market.
Argentine stock market rises 20% at the opening
The Buenos Aires Stock Exchange soared higher at the open this Monday and surpassed 20% over Friday's first round.
In the main shares panel, papers such as those of Banco Supervielle and those of the gas company Metrogas rose up to 31% in a generalized climate of euphoria.
Meanwhile, on the New York Stock Exchange, Argentine shares (ADR) posted strong mid-day gains, led by banks Supervielle (+40%) and BBVA Argentina (+38%).
The climate of optimism was also reflected in the foreign exchange market where the peso appreciated strongly, dissipating a weeks-long run against the Argentine currency.
Peso opens strong
The Argentine currency opened this Monday with a strong appreciation against the dollar, according to the boards of the state-owned Banco Nación.
In just half an hour of operations, the selling wave drove the Argentine currency up 9.5% with respect to the previous day of the legislative elections.
At the Banco Nación, the Argentine currency was trading at 1:30 p.m. GMT at 1,370 pesos per U.S. dollar, compared with 1,515 at the close on Friday.
The ruling party wins an important political victory in the legislative elections
In the Chamber of Deputies, the ruling party went from 37 to 93 seats out of a total of 257. This makes it the first minority, with the capacity to negotiate key reforms.
As for the Senate, LLA increased from six to 19 seats out of a total of 72. This allows it to reach parity with the Peronist bloc and sustain presidential vetoes.
The Trump administration had pledged up to $40 billion in financial aid, although Donald Trump had conditioned that lifeline on a victory by his ally at the polls. This assistance includes a combination of credit lines, currency swaps and backing from sovereign wealth funds and private banks.
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