Overview

• La Libertad Avanza lost the Buenos Aires provincial race by about 13.5 points, setting off a market selloff that pushed the dollar toward the ARS 1,460–1,471 band ceiling and drove sovereign bonds lower as risk spreads neared 900–1,000 bps.
• The Central Bank confirmed a US$200 million sale in the FX market, while multiple reports estimate the Treasury sold roughly US$500 million before the vote, leaving a modest dollar deposit cushion for further support.
• Economy Minister Luis Caputo said policy will not change on the fiscal, monetary or FX fronts, even as President Javier Milei reposted a proposal to “free” the dollar and remove bands, prompting questions about the current regime.
• Analysts highlight a constrained toolkit—higher interest rates, additional futures operations and further encaje hikes—each weighed down by already high costs, thin usable reserves and upcoming debt maturities.
• Morgan Stanley withdrew its recent buy call on Argentine bonds, warning of stricter policy, additional peso depreciation toward the band ceiling and likely official interventions to prevent a sharper weakening.