For months, Javier Milei repeated a concept that sounded like a campaign slogan but that the market ended up translating into prices: the "kuka risk", the premium that Argentina pays when the probability of a Kirchnerist return increases. Whether it was real or not is easy to measure: dollar, reserves, bonds, country risk, and dollarization.
1) Post Buenos Aires: the punishment for the idea of return (and expensive)
The breaking point was the Buenos Aires election. After the national government’s defeat in the province, on Monday September 8, the market reacted as if the "worst scenario" had reopened: stocks and bonds collapsed, the dollar rose, and stress reappeared. The S&P Merval fell 13.3% in pesos in a single session; the wholesale dollar jumped by 3%–4% and even hit $1,450 intraday.
In New York, the signal was even more brutal: bank ADRs plunged between 23% and 24% (Galicia -23.6%; Francés -24.4%; Macro -23.5%; Supervielle -24%) and YPF fell 15.3%. In debt, the blows were also direct to the heart: GD30 -5.9% and GD35 -9.3%, with country risk climbing to 1,034 points.
The worst part: it was not “a bad day”. Ten days later, on September 18, country risk soared to 1,453 points (a daily increase of 16.6%), with dollar bonds falling by up to 14%. To curb the currency surge, the BCRA ended up selling USD 379 million in reserves, while the dollar touched the ceiling of the band (1,474 pesos).
The sequence made it clear where the problem came from: political defeat → risk flight → dollar to the ceiling → use of reserves → country risk at a maximum.
2) Post October: the market “disarmed the fear” in just one session
On October 27, with the national legislative elections, the opposite occurred: the market operated as if the probability of returning to the Kirchnerist past had decreased. Country risk plummeted from 1,081 to 708 points: 373 points less in a single session. At the same time, the rally was textbook: Merval +21.8%, ADRs up to +48.1%, bonds up to +24.3%; even the official retail dollar dropped $55 (-3.6%) and closed at $1,460. This is not “optimism”: it is asset prices reacting to a single dominant variable, the political continuity of the program.
The most political data of all: the dollarization of the people.
In October, the BCRA still showed strong coverage: individuals with net outflows of USD 5.068 billion and net purchases of bills amounting to USD 4.196 billion (hoarding). However, later, according to figures presented by BCRA authorities and cited by the media, the hoarding collapsed to USD 200 million in November, down from USD 4.600 billion in September and USD 3.400 billion in October.
3) December 2025: how the electoral year “closes” and why the climate changes
The year-end consolidates that trend. By mid-December, country risk reached as low as 555 points (the lowest since July 2018) and closed that day around 569, with the market itself attributing part of the movement to signs of accumulation/purchase of reserves and better bond prices.
In parallel, the dollar remained within the bands. The Government also placed a dollar bond for VN USD 1.000 billion, receiving USD 910 million in cash, with an implicit rate of 9.26%.
In "confirmed" investments, the RIGI already shows approval numbers: the Rosario Stock Exchange recorded USD 33.876 billion submitted and USD 15.739 billion approved (8 projects; 46.5% of the total recorded). This is not a promise: it is an approved file.
Political conclusion: the “kuka risk” was not a metaphor.
It was a visible premium that rose when Buenos Aires suggested a halt or reversal, and fell when October cleared the horizon. December confirms it: country risk in the zone 550–570, dollar more contained within the bands, RIGI approved projects, and a return (albeit partial) to debt issuance that reopens the financing circuit. In Argentina, whether we like it or not, the probability of political continuity continues to drive the dollar price and the cost of credit.
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