Dollar controls getting stricter

[dennisr]

When they raid the house of ill repute, even the piano player goes to jail: permanent tourists.

 

[PhilipDT]

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.

Yes but devaluation would hurt the current corrupt local oligarchy who draw big benefits from an overvalued peso and soaring inflation. They just sit and watch as the difference between dollar inflation + peso depreciation and inflation explodes, basically magicking more dollars into their bottom line.

Of course the dollars aren't magically showing up, they're being transfered there from the central bank by their friends in the government. These same friends who continue to piss on the public and say that it's raining.

 

[esllou]

so relieved I've never brought serious money into this country. Was clear 2 years back it was a house of cards waiting for a breeze. Been ATM'ing it for my whole stay and gracias a dios for that.

sick of so many countries' economies being run by idiots who wouldn't pass Economics 101. Maybe CK has decided "let's cause the next crisis ASAP, so we're out of the woods by the time the next election comes along...and take credit for the recovery too!"

political genius.

 

[GreenLeaf]

I'm one of those who has to pay my rent in dollars, and it is due this week. Went to Banco Piano on Monday, and they weren't selling. Went again yesterday, waited for half an hour as the AFIP system was down (others had been waiting at least two hours), it came back up and I went to the counter to be told I needed to go to AFIP to get a CDI before I could buy dollars. This is with a foreign passport and a tourist visa. I'm guessing there would be a long wait at AFIP (all the locals were being refused permission and sent to AFIP) and I have no wish to registered there in any way so didn't go (my work comes from my home country). Will have to find another way of getting this months rent (I know I could just refuse to pay in dollars, threaten to report the landlady etc, but she's a good lady, the apartment is great, and I agreed to pay her in dollars) and then my contract is up so this might just have speeded up my plans to leave - I'm afraid this place just isn't worth the hassle to me any more.

 

[jb5]

I think landlords like yours will have to start taking pesos. I'm guessing she'd rather do that than have you leave. They read the papers too. It's goin to be painful though as the peso continues to slip:

http://www.vancouversun.com/business/Argentine+peso+slumps+government+measures/5641891/story.html

 

[CarverFan]

Getting a CDI isn't like getting registered for taxes, I remember getting one when I had a tourist visa. It's nothing, just fill out a form and get a number. You don't get asked to pay tax, you just need to present it for various banking transactions.

 

[Sleuth]

On another note, our escribano just mentioned to us that he had an apartment sale almost fall apart at the last minute as the buyers were not able to get dollars to pay for the sale. The source of their pesos: a bank loan. Everything was above board, but they still have not yet been able to get dollars, so had to negotiate an extension. The sellers refused to accept pesos.

This could be an ongoing issue since the whole real estate market is priced in dollars and involves all cash transactions.

 

[sesamosinsal]

On another note, our escribano just mentioned to us that he had an apartment sale almost fall apart at the last minute as the buyers were not able to get dollars to pay for the sale. The source of their pesos: a bank loan. Everything was above board, but they still have not yet been able to get dollars, so had to negotiate an extension. The sellers refused to accept pesos.

This could be an ongoing issue since the whole real estate market is priced in dollars and involves all cash transactions.

According to reports, loans for real estate are being exempted for the time being. I read elsewhere that it would be for a 30-day-period, starting yesterday. The previously linked article says 15. Who knows?

I think what's most frustrating about all of this is how ill-planned these regulations are. Allegedly, they called up banks and casas de cambio on Thursday or Friday of last week advising them about a new program to be installed on their computers, and then they announce these new regulations to go into effect the very same day that the program was installed. I want to say, "Unbelievable!," but really... it's not unbelievable at all.

 

[AngelinBA]

I thought I understood these Argentineans, been here for 11 years and married to a local for most of that time. But was completely thrown last night when my husband told me that he thought the AFIP controls weren't such a bad idea.
I come from the land of DavoNZ with his excellent postings on what life in NZ is like in these matters, and it is completely Completely beyond me how anyone could accept this kind of control of your earnings and expenses to see how much foreign currency you can buy on the off chance that this might stop the people who's intentions aren't completely honourable!
According to my husband, it's fine because I could continue to buy the small amount of dollars each month that we do, because my salary justifies this amount (once we get through the hours-long queue at AFIP to authorise it).
I have heard similar sentiments from workmates as well. 'if it stops the baddies, then it can't be all bad'. I don't get it.

 

[davonz]

This reminds me of what was happening in Zimbabwe when i was there about 6 years ago.
The gov put controls on currency exchange, inflation was going crazy, and then the black market for US$/Euros/Rand went crazy.
At the time the official exchange rate for US$1 was Z$120k, however on the black market i was getting Z$420k for 1 US$, people were so desperate to get their hands on hard currency. I would only change what i needed for a day or 2, as the zim dollar kept on going down, no matter what the gov said or did, and prices kept on going up.
Rather than let the value of their money disappear with inflation, as soon as they were paid, they were spending, as tomorrow prices always went up. And anyone who had savings, were buying things that i thought was stupid at the time, fridges, small appliances, cows, sheep, shoes - anything that was physical, and could be swapped later on... however a few months down the track it turned out they were very smart, as you couldnt buy these things unless you had US$, which few people had as the gov needed them and took them, they virtually made it impossible to exchange or buy foreign currencies.

I will never forget the millions of Z$ i would carry around daily, i would have a wad an inch or 2 thick in my back pocket.. Or that they stopped printing on both sides of the notes, as it was to expensive - the value of the paper the money was printed on was more than the money it represented..

I am not saying that this will happen here....... but then you never know !!!