【By Observer Net, Yuan Jiaqi】

On October 26th local time, the Liberty Front Party (LLA) led by Argentine President Milei won the first place in the 2025 midterm elections in Argentina with a vote share of 40.8%, achieving a decisive victory. This not only brought benefits to the U.S. Trump government that used over ten billion dollars to buy Argentine pesos to stabilize the market, but also relieved Wall Street investors who had bet on the country.

According to a report from the "Wall Street Journal" on the 27th, after the election results were announced, the Argentine financial market saw a significant rise: data from the financial trading platform Tradeweb showed that the exchange rate of the Argentine peso against the dollar increased by about 4%; the price of U.S. dollar-denominated Argentine government bonds due in 2046 rose by 11 cents, and the trading price was approximately 67 cents of the face value; the Argentine benchmark stock index Merval closed up 22%.

Wall Street mutual funds and hedge funds have also benefited from the bond rebound. U.S. media said that if Milei can fulfill his plan to boost the Argentine economy, they could expect greater gains.

Data from the U.S. investment research platform "Morningstar Direct" shows that as of last week, U.S. mutual funds and U.S. exchange-traded funds (ETFs) held about $5 billion in Argentine sovereign debt, with major holders including Pacific Investment Management Company (Pimco), Fidelity, and BlackRock. In addition, hedge funds have actively traded Argentine assets.

Thierry Larose, portfolio manager for emerging market bonds at Swiss Vontobel Bank, said, "Global investors may increase their allocation to Argentine assets, which should bring a strong and sustained rise in the coming days, weeks, and even until the end of the year." Larose revealed that his company had been buying Argentine pesos and U.S. dollar-denominated bonds before the election.

On October 23rd, Milei held a campaign rally in Rosario, Argentina IC photo

U.S. media also mentioned that the likelihood of advancing the relief plan introduced by the United States to stabilize Argentina's finances has now significantly increased. The plan may help Argentina replenish its dwindling foreign exchange reserves, as the country needs to repay billions of dollars in foreign debt next year.

President Trump previously publicly stated that the premise for the U.S. to continue providing economic aid to Argentina is that Milei's party wins the midterm elections. This statement was criticized as "outrageous election interference." According to sources, this aid plan is still under progress.

Benjamin, the U.S. Treasury Secretary, who was once a hedge fund manager and specializes in foreign exchange, led the entire operation. On October 9th, the U.S. Treasury bypassed the usual channels dominated by the Federal Reserve, directly purchased Argentine pesos and concluded a $200 billion currency swap framework agreement with the Argentine central bank, while also pushing another $200 billion financing scheme involving U.S. private banks.

U.S. media pointed out that these unconventional operations, which took place when the Argentine peso was at a historical low and bonds were being sold off, were quite risky. Now, despite Milei's election victory, many risks remain. It remains to be seen whether Argentina can maintain its current "limited float" exchange rate system without U.S. support.

Many analysts believe that once the election ends, Milei will tend to float the currency, thus easing the pressure on the country's trade position.

Brad Setser, a senior researcher at the Council on Foreign Relations and a former U.S. Treasury official, warned, "The risk is that Argentine policymakers might mistakenly believe that Milei's political victory, plus possible unconditional U.S. support, would allow them to maintain a strong peso policy, but in fact, Argentina does not have sufficient external balance sheets to support this stance."

According to insiders, there are many questions about how the U.S. will finalize the aid details. According to their information, since U.S. Treasury officials are still discussing what collateral Argentina can provide to protect American taxpayers from losses, the swap amount has not been released yet. A spokesperson for the U.S. Treasury did not respond to requests for comment.

The "Wall Street Journal" previously reported that the Trump administration also commissioned JPMorgan Chase, Bank of America, and other large U.S. banks to establish a $200 billion loan facility, but these potential funding sources have struggled to reach consensus on what collateral to accept to mitigate credit risk.

Axel Kicillof, the governor of Buenos Aires province and the most influential official of the "Peronist" opposition, recently openly criticized Trump for "openly interfering" in Argentine politics.

He warned that the billions of dollars in aid provided by the U.S. Treasury and investment banks would not benefit ordinary Argentines who were forced to go bankrupt due to subsidy cuts and economic austerity, "I want to make it clear that the U.S. government and JPMorgan Chase are not charities," "they came to Argentina just to make money."

This article is an exclusive piece by Observer Net. Unauthorized reproduction is prohibited.

Original: https://www.toutiao.com/article/7566181619042157108/

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