The Argentine peso and share prices dropped sharply Monday after President Javier Milei's libertarian party suffered a drubbing in a key provincial election.

The dollar rose 5.3 percent compared to Friday as trading opened in the currency market and shares of Argentine companies that trade on Wall Street lost nearly 20 percent.

The Buenos Aires Stock Exchange recorded losses over 12 percent.

The financial markets reacted after budget-slashing Milei's La Libertad Avanza (LLA) party came out nearly 14 percentage points behind the victorious center-left Fuerza Patria coalition in elections in Buenos Aires Sunday.

Buenos Aires is the country's most populous province and economic powerhouse, and the vote was considered a bellwether for national legislative elections in October.

Milei gover

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