Argentine Markets Plunge After Milei’s Buenos Aires Defeat

Argentina’s financial markets tumbled on September 8, 2025, following the Buenos Aires provincial election results reported by official electoral authorities.

Investors reacted swiftly when Javier Milei’s La Libertad Avanza secured just 34 percent of the vote, trailing the Peronist coalition by 13 points. The Merval index opened down 11 percent, marking its steepest drop in months.

Stocks listed in New York fell between 15 and 20 percent, as global funds exited Argentine equities. Sovereign dollar bonds slid across the yield curve, with 2035 maturities trading at $0.5537 and yields rising to 12.8 percent.

The peso weakened seven percent to 1,450 per U.S. dollar, nearing its upper trading band, and the country’s risk premium leaped by 1,000 basis points.

Buenos Aires province accounts for nearly 40 percent of Argentina’s electorate. Its vote serves as a political barometer ahead of midterm legislative elections in October.

Milei campaigned on radical free-market reforms, including spending cuts, deregulation, and a tight monetary policy to curb inflation.

He raised interest rates to nearly 80 percent and restricted banking liquidity. Authorities also intervened directly in the foreign-exchange market to defend the peso.

Investors had expected Milei’s party to lose by no more than five points. The wider defeat cast doubt on his capacity to push further reforms through Argentina’s divided Congress.

Morgan Stanley withdrew its buy recommendation on Argentine assets, citing heightened political uncertainty. Analysts warned that the election setback could trigger a negative feedback loop of capital flight, policy paralysis, and rising borrowing costs.

Argentina’s public debt stood at 80 percent of GDP, according to the Ministry of Economy. Rising yields will increase debt-service costs, compounding fiscal pressures.

A weaker peso raises the risk of informal dollarization as businesses and savers seek refuge in dollars, depleting central bank reserves. Milei acknowledged the electoral loss and pledged “deep self-criticism” within his coalition.

He vowed to maintain existing currency controls and monetary restrictions while pursuing other reforms. Political tensions surfaced as key advisers remained absent during Milei’s post-election meeting with his cabinet.

This episode underscores how local elections can reshape market sentiment overnight. Political setbacks in Argentina drive immediate shifts in stock prices, bond yields, and currency values.

Stakeholders worldwide should note that electoral outcomes often carry direct economic consequences, affecting everything from government borrowing costs to private sector confidence.