CEPO is lifted

[Caribbean Cool]

Okay....the deed is done. Doesn't seem terrible...but what do I know, Next question....what happens in the grocery store?

 

[Rich One]

Okay....the deed is done. Doesn't seem terrible...but what do I know, Next question....what happens in the grocery store?

Since the dollar went Down grocery prices will go down...?? maybe. Gas also since dollar plus crude prices went down

 

[LukeHomeslice]

Since the dollar went Down grocery prices will go down...?? maybe. Gas also since dollar plus crude prices went down

Grocery prices never go down. At most they will pause price increases until the next chance to go up

 

[LuckyLuke]

Since the dollar went Down grocery prices will go down...?? maybe. Gas also since dollar plus crude prices went down

Queue the sound stage laugh track....

Oficial went up, therefore prices will go up. Blue goes up, therefore prices will go up. Oficial goes down...never. Blue goes down..."it's just temporary, no need to lower prices.".

Okay....the deed is done. Doesn't seem terrible...but what do I know, Next question....what happens in the grocery store?

Is the deed terrible? Depends on your experience. For all the apparent applause, unless you work on the front lines of specific export/import sectors I'd say it's not great. Every argentine earning a sueldo in pesos woke up to a 12% loss of purchasing power this morning. Every argentine earning a sueldo in dollars woke up to a 6.55% loss of purchasing power.

Every asset holder waiting to expatriate their capital likely woke up this morning feeling fantastic. They can now buy some cheap dollars and send them abroad assumedly before the cepo snaps shut again.

Now we patiently wait for RIGI and the wealth of investments to flood in...

https://www.reddit.com/r/RepublicaArgentina/comments/1jvdvkp/m

 

[carride]

Is the deed terrible? Depends on your experience. For all the apparent applause, unless you work on the front lines of specific export/import sectors I'd say it's not great.

That is what was needed. Something like this to get them exporting. Importers will now have to pay more for their dollars, but without the slow bureaucracy of asking permission.

Every asset holder waiting to expatriate their capital likely woke up this morning feeling fantastic. They can now buy some cheap dollars and send them abroad assumedly before the cepo snaps shut again.

Not all assets holders. Companies who have been restricted to hold their dividend profits all these years are still restricted from selling those pesos. Seems like a decent idea to keep that mad rush out of the market. Maybe this encourages them a bit more to invest locally? Future profits will be allowed to be expatriated without restriction.

 

[LuckyLuke]

That is what was needed.

Not really...they've squeezed currency holders from both sides forcing us all into a precarious tightrope using additional borrowed funds to plaster over fundamental deficiencies in medium term balance of payments. The end result, if not managed correctly, could be explosive.

I'm all for removing the CEPO, and I sincerely hope it produces some long term change. Time will tell Milei's vision is right.

I can tell you one thing, rather than spending borrowed time defending a currency that lacks clear market support, I would suggest investing a portion of it in retooling the export sector to be more competitive internationally...which would provide an increased surplus of trade, foreign reserves and employment rather than waiting for someone else (foreign investors) to do it for us.

 

[antipodean]

Is the deed terrible? Depends on your experience. For all the apparent applause, unless you work on the front lines of specific export/import sectors I'd say it's not great.

“Atraso cambiario” - it hurt every Argentine sector and business that has anything to do with doing business or buying, selling components, goods and services across borders and ultimately consumers. You get paid in official dollars yet much of your costs, including paritarias in many unions, follow parallel dollars with an ever widening gap that you can’t recover = you apply a mega margin to cover your risk and up your prices for tomorrow to cover yesterdays losses = inflationary cycle.

 

[Vossos]

I was expecting a quick rise to 1400, can anybody ELI5 why the peso seems to have strengthened 10-15%? Is it the IMF loan?

 

[Ronnie Hotdogs]

“Atraso cambiario” - it hurt every Argentine sector and business that has anything to do with doing business or buying, selling components, goods and services across borders and ultimately consumers. You get paid in official dollars yet much of your costs, including paritarias in many unions, follow parallel dollars with an ever widening gap that you can’t recover = you apply a mega margin to cover your risk and up your prices for tomorrow to cover yesterdays losses = inflationary cycle.

Will Argentine business owners lower their margins before the place implodes though?
I very much doubt that it’s within the Argentine psyche to do so…

 

[Che1990]

Will Argentine business owners lower their margins before the place implodes though?
I very much doubt that it’s within the Argentine psyche to do so…

Of course they wont’t.

The peso is still the peso. They wont decrease prices.

It is about to get RIDICULOUSLY expensive.