Argentina Takes Steps to Dollarize and Holds Key Rate

[MilHojas]

https://finance.yahoo.com/news/argentina-central-bank-takes-steps-201647131.html

 

[jorisw]

I’ve heard dollarizarion isn’t really feasible given the reserves required in pesos.

But I’m not an economist so if anyone is please fill me in.

 

[Redpossum]

It's a complicated subject, that's for sure.
There are wild claims in both directions, and no way to tell who's blowing smoke up our collective ass.

 

[carride]

I’ve heard dollarizarion isn’t really feasible given the reserves required in pesos.

It is not full dollarization. This step allows prices shown in dollars, and for those who happen to have USD accounts in an Argentina bank to use their associated debit card to make the purchase. No conversion of peso to dollars so not affecting the reserves. No advantage for Foreigner cards who still must make the purchase at the peso price that the merchant quotes, and convert the same way as today.

That is what I understood from previous more.detailed news this week. The link was here in the forums I think
.

 

[daveholman]

Dollarization is a misnomer for what Milei is trying to do. Dollarization means to replace a countries currency with the US Dollar. This has been done in Panama, Ecuador, El Salvador, etc.
It requires huge USD reserves, because the first thing the Central Bank has to do is buy all the existing currency and pay for it in dollars.

What Milei actually wants is for Argentina to not have a preferential currency, and to allow businesses and customers to choose whether to transact in ARS, or USD or Bitcoin, or whatever - with no penalty applied to any of those choices.

This only requires laws allowing Argentine banks to offer dollar denominated accounts (or whatever other currencies people want to use).

 

[LuckyLuke]

My cunado recently went to Chile and used his Arg Naranja card for make $1,500 USD in purchases. The bank charged his card a 30% PAIS tax (Dolar Tarjeta), then an additional 30% AFIP retencion. They then told him he can pay them the $1,500 in USD cash and they'll refund all fees. Strange times...

 

[desde_Holanda]

Dollarization is a misnomer for what Milei is trying to do. Dollarization means to replace a countries currency with the US Dollar. This has been done in Panama, Ecuador, El Salvador, etc.
It requires huge USD reserves, because the first thing the Central Bank has to do is buy all the existing currency and pay for it in dollars.

What Milei actually wants is for Argentina to not have a preferential currency, and to allow businesses and customers to choose whether to transact in ARS, or USD or Bitcoin, or whatever - with no penalty applied to any of those choices.

This only requires laws allowing Argentine banks to offer dollar denominated accounts (or whatever other currencies people want to use).

You mean: dollar dominated current accounts I guess?

 

[Ceviche]

My cunado recently went to Chile and used his Arg Naranja card for make $1,500 USD in purchases. The bank charged his card a 30% PAIS tax (Dolar Tarjeta), then an additional 30% AFIP retencion. They then told him he can pay them the $1,500 in USD cash and they'll refund all fees. Strange times...

Its almost a curse not to be able to access foreign credit and debit cards when traveling and having to depend on local cards.

 

[antipodean]

Its almost a curse not to be able to access foreign credit and debit cards when traveling and having to depend on local cards.

For the past few years a few private banks already issue U.S. issued credit cards (e.g. Amex platinum or centurion) for their Argentine customers who can pay them locally via CCL.

This year a few fintech companies are also starting offering Argentine customers U.S. issued credit, debit and prepaid cards which are far more accessible to most and possible to pay or top up using MEP.

As for local issued credit cards, all throughout 2024 it has been better to pay off USD consumption in USD at the teller window - and can actually be very cost effective since most Argentine banks don’t charge high foreign transaction fees or commissions unlike those issued in the U.S. / EU that typically want a cut of like 1-2%.

 

[Rich One]

It is not full dollarization. This step allows prices shown in dollars, and for those who happen to have USD accounts in an Argentina bank to use their associated debit card to make the purchase. No conversion of peso to dollars so not affecting the reserves. No advantage for Foreigner cards who still must make the purchase at the peso price that the merchant quotes, and convert the same way as today.

That is what I understood from previous more.detailed news this week. The link was here in the forums I think
.

The displayed dollar price is calculated using the Seller's dollar choice.. MEP, CCL, Blue, etc.