Dollarization

[argeiCanuck]

I never knew what it meant.

Finally my recent understanding is that the Argentine Currency will be the Dollar. $pesos will cease to exist. (Following suit countries like Zimbabwe Ecuador El Salvador Panama Somalia Guam ...). Argei Government will buy all currently circulating $pesos at their own self declared $offecial rate. I.e. government will buy the peso barato cheap. They will pay 1$USD for every existing currently circulating $800 pesos. (not $400 pesos ,,, magic ,,,). (amazing that everyone else is/was a thief but not me)

This is why all commerce now is being conducted at the new magical official rate $1USD=$800ARS. No more commerce at previous official rate $1USD=$400ARS.

Any Argentine with peso got robbed.

Did I get it now. Or am I still missing it?

 

[argeiCanuck]

No more exchange rate. No more pesos. $ARS will cease to exist. Straight forward Dollars at ATM and supermarkets. No need for Western Union. No Buquebus Day trips.

Inflation is determined by US FEDS.

 

[sergio]

No more exchange rate. No more pesos. $ARS will cease to exist. Straight forward Dollars at ATM and supermarkets. No need for Western Union. No Buquebus Day trips.

Inflation is determined by US FEDS.

If it happens it won't be very soon.

 

[argeiCanuck]

No need for "cara grande" crisp $100USD bills. Regular normal bills of all denominations. (But hopefully not the $3 bills).

Am I getting it now?
Am I correct?
Or am I still missing something?

 

[steveinbsas]

No need for "cara grande" crisp $100USD bills. Regular normal bills of all denominations. (But hopefully not the $3 bills).

Am I getting it now?
Am I correct?
Or am I still missing something?

Where is the Argentine government going to get the dollars to "buy" the pesos (now "officially" worth 860 to one)?

 

[argeiCanuck]

Where is the Argentine government going to get the dollars to "buy" the pesos?

Good question.

I am challenged. Can not go that far. Me mataste.

 

[sts7049]

the official rate is not 400 anymore anyway so that number is moot.

 

[Quilombo]

That is the goal, but as I, other forum members, and people way above our pay grades have been saying, where is Milei and the BCRA getting these dollars from?

In November it was estimated it would take about 45 billion to dollarize the economy at the Blue rate. Let's pretend for the sake of argument that this hasn't changed in either direction.

We remain no where close to being able to dollarize, as we now owe 16 billion following the ruling of Petersen Energia Inversora, S.A.U. v. Argentine Republic, the IMF is against dollarization and they're here this week renegotiating with Milei, China isn't letting Milei use the currency swap because he'd rather "own the libs" than help the country he governs by being an asshole to Beijing, so whatever timeline exists to dollarize I'd push it out because we're not meeting it.

Now, if we dollarized at a much higher rate, or did a split like in 2001, or used different exchange rates it's more doable, but I don't think that's going to happen (unless inflation gets really bad and they say screw it, 5,000:1 and we're dollarizing now or something)

 

[sts7049]

do you actually believe that China would allow Argentina to dollarize using the currency swap anyway? no way!

 

[antipodean]

That is the goal, but as I, other forum members, and people way above our pay grades have been saying, where is Milei and the BCRA getting these dollars from?

In November it was estimated it would take about 45 billion to dollarize the economy at the Blue rate. Let's pretend for the sake of argument that this hasn't changed in either direction.

We remain no where close to being able to dollarize, as we now owe 16 billion following the ruling of Petersen Energia Inversora, S.A.U. v. Argentine Republic, the IMF is against dollarization and they're here this week renegotiating with Milei, China isn't letting Milei use the currency swap because he'd rather "own the libs" than help the country he governs by being an asshole to Beijing, so whatever timeline exists to dollarize I'd push it out because we're not meeting it.

• Latest news from the IMF - they are already playing ball with the government... Argentina get's a waiver and a US$3bn disbursement to cover its next repayments.
• The proposed treatment of the $16bn YPF debt has been covered in another thread so that one can probably be put to the side.
• One the one hand the new government has been adding dollars to the reserves daily to reach $23bn, on the other hand it is uncertain that this trend will continue throughout 2024.
• And something that has been clearly spelled out since October and earlier, that dolarization would/ could not be expected to happen before at least 2025. Still a lot of turbulent water to pass under the bridge between now and 2025... and we have not even seen how Congress or Senate will treat the DNU+Omnibus package yet which contains key components to be able to further bolster USD reserves and eventually dolarize the economy.

(unless inflation gets really bad and they say screw it, 5,000:1 and we're dollarizing now or something)

I'd suspect that just ripping the band-aid off like this is more their style. I had heard rumors recently that they would try to bring it forward in March/ April to shorten the period of pain (after a so-called "trampa de febrero"?), but have shrugged them off as being too far-fetched... but then again disarming the Liliqs issue in the short-term without emission was also seen by many as far-fetched just some weeks ago.