Dollar controls getting stricter

[PhilipDT]

Ugh. I'm getting kind of sick of it.

I really like Argentina, I have a ton of great friends here. I'm a good citizen y vecino; I never litter, I pick up other peoples trash, separate my recyclables, etc etc. Not to mention, I am constantly pouring dollars earned overseas in to the local economy.

I'm probably not going to leave anytime soon, but if I do, it will be because I will have finally had enough of this country doing everything in its power to make me feel unwelcome.

 

[Johnny]

I'm leaving in December after six years here. Actually my departure is work related, but this crackdown at the cambios, and this self fulfilling prophecy insanity about dollars/pesos makes me less ambivalent about skedaddling. I have not been anti CFK for the most part, and have seen the good and the bad about the Kirchnerites, but they are going to shoot themselves in the foot with this continued delusional thinking about fiscal policy.

 

[BAFinance]

As of today, the law went into effect controlling currency, primarily Euros and dollars.

I have more than a few friends who logged onto the AFIP website, and were blocked from buying Euros or Dollars of any denomination.

I believe this inability to buy hard currencies is going to send the exchange rate of these hard currencies to a significantly higher level and is likely to create the political unrest within the upper class sufficient to cause a small crisis.

Should be an interesting next few months! I'm going to stock up on popcorn to enjoy the show

 

[steveinbsas]

I believe this inability to buy hard currencies is going to send the exchange rate of these hard currencies to a significantly higher level and is likely to create the political unrest within the upper class sufficient to cause a small crisis.

Should be an interesting next few months! I'm going to stock up on popcorn to enjoy the show

I didn't posted in this thread before reading this post and I'm afraid it might be spot on.

I stocked up on popcorn (as well as rice and beans) a year ago.

If there is a crisis, let's hope it's indeed short lived.

But I will not revel in watching it unfold.

 

[perry]

Too many people are speculating with popcorn and malbec hoping that Argentina goes to hell so that they can have cheap meals and pay their maids 5 pesos an hour again. It seems that many expats do not care that the argentinian suffer mostly as long as they save a few pesitos a month with a lower exchange rate.

This time a devaluation of the peso will not make one iota of difference as inflation in dollar terms is at historic levels and any devaluation will be unoticeable within months.

 

[steveinbsas]

Perry is right...and he didn't even mention those who would like to be able to buy Argentine properties for fewer dollars as a result of a weaker peso. Even though that is unlikey it could be something that might help his business, but not the country in which he chose to live in and clearly cares about (much more than making a profit from the misfortune of the Argentine people as those in power expropiate their wealth and misappropriate the funds they have seized..,and confiscate additional wealth by inflating the currency).

The controls are obviously an attempt to prevent those who have wealth in pesos from converting it to dollars, thereby preserving that wealth...at least for a while (at least as long as the dollar retains it's value).

 

[Napoleon]

I don't think that the coming devaluation will touch large items (like property, cars, antiques) but rather will be seen for short periods on things that take a while to change the prices. Like restaurants & some groceries.

It basically won't help the expats & people earning from out of the country, but it will hurt the average Argentine, expat English teacher, and laborer from neighboring countries.

 

[davonz]

If there is a devaluation of the peso, i dont understand why people think it is going to hurt the locals or argentina.

So what happens:
Imports become more expensive - is this a bad thing for industry argentina ?.

Food - argentina produces much of what it eats, so they shouldnt increase in value to much. There will be some increase, as machinery (tractors etc) will go up in price, and maybe fuel will increase (i dont know how much fuel if any argentina imports). But because wages are in pesos and is a big cost to farming, food prices should be stable.

Cars, whiteware, electronics - as most are made in argentina, and due to import restrictions, they shouldnt increase in price to much. If they are made from imported parts this will effect the cost of production, but the wage costs, factory rentals, transport cost inside argentina will stay the same, or should stay pretty much the same.

Houses/Property - this is the big one, because they are in US$. So existing housing stock will become more expensive in peso's. However, construction costs in peso's shouldnt change much either, as most items used for construction here are locally made, and so new buildings shouldnt increase in price to much. This would have an effect of existing housing prices - making them drop in price maybe and to become more affordable.

Travel - this will be more expensive for overseas trips, but will also make argentine destinations more attactive to locals. However argentina will became a cheaper destination for foreigners, so a boost of tourists.

There is one winner in the devaluation game - exports. Argentina exports will stay the same in US$ terms (unless global commodities fall in price) and when those US$ are converted back to pesos they are worth more in pesos. If wages and other local imput/fixed cost stay the same, the export businesses should benefit, as would the tax man/gov.

The biggest problem i see if there is a devaluation is the reactions of the locals - saying, well the peso has dropped so we better put the price up, which will exacerbate the inflation problem.

 

[jb5]

The average Argentine won't be touched by this. Neither will the average expat. Most have limited dollars/euro and scrape by with peso earnings.

This is aimed at, and will most impact, the wealthy who are taking all the money they can out of the country. Those turning every peso into dollars and owning things like dollar priced real estate.

While it feels like boom times to many here, the wealthy have been betting against their country. This is not about a handful of expats wanting cheap maids. This is about the ruling class of Argentina spiriting the wealth out of the country at an alarming rate. All those soy bean Pesos (i mean dollars) are in Miami banks.

Look at the number of super high end rentals turning up in Barrio Parque, Barrio Norte and Recoleta. Ask why the renters are letting their beautiful properties go. Turns out Miami and NYC are beckoning. The poor get $60 per kid and the rich get many millions from their commodity holdings and remove it all from the country.

Interesting CFK waited this long to stop it. Interesting times ahead.

 

[French jurist]

Here's a quick translation to English of the Central Bank reglementation regarding tourists/foreign exchange.
Sorry for the bad quality of the translation, not my native language & I'm in a rush today.

Translated from :
http://www.bcra.gov.ar/pdfs/comytexord/A5241.pdf

Quick translation and notes :
i. The sale of currencies for the purpose of tourism and travels to non-residents will be subject to an authorization by the Central Bank when the following requisites are not fully met: a) it is proven that the previous entry of the foreign currency through the local currency market during the stay of the non-resident in the country for an amount not less than the one being asked for by showing the original receipt of the exchange operation by which the foreign currency entered the country, and for which the process will be treated by the entity for the amount operated by the customer; and b) it does not exceed the equivalent amount of 5.000 USD for each customer and during the stay in the country. Copy of the required documentation shall be kept in the entity at the disposal of the central bank.

ii. Modification of point 3 of note “A” 4662, being replaced by the following :

3. “The purchase of currencies and the purchase of foreign currency bills will be done after approval by the central bank.

So, what this text means :
There are two cumulative conditions for a non resident to be able to buy freely currencies :
1- proving that the amount being exchanged has previously entered the country through the local currency market (the receipt needs to be kept) --> Example = John Doe enters Argentina with 2.000 USD, changes them to 8.500 pesos but at the end of his trip, he wants to change back 2.500 pesos to USD = he will have to show the original receipt
2- operation must be less than the equivalent of 5.000 USD (e.g. 5.000 USD/4.300 EUR/etc).

If those two cumulative conditions are not met -> the Central bank will need to give its approval.