How's everyone hanging in there with the cost of living these days?

[Rich One]

I was more optimistic when I posted the remarks you quoted. I could never have imagined that the US would lend Argentina $20 billion from its treasury on top of a 20 billion IMF loan. I didn't think that such a wildly overvalued peso could be sustained.

Hold on to your seat, the overvalued/controlled peso will hold for a long time. Remember the Menem Convertibilidad (1:1 peso dollar) lasted for almost ten years....

 

[Johnny]

Hold on to your seat, the overvalued/controlled peso will hold for a long time. Remember the Menem Convertibilidad (1:1 peso dollar) lasted for almost ten years....

The overvalued peso, rising apartment expenses, and Hospital Italiano gouging are making me grind my teeth.

 

[Caribbean Cool]

Grocery prices are skyrocketing..period.

 

[ksm76]

Hold on to your seat, the overvalued/controlled peso will hold for a long time. Remember the Menem Convertibilidad (1:1 peso dollar) lasted for almost ten years....

100% agree. Now with a guaranteed 20 billion from the US, in case needed, his plan of trying to make Argentinas peso strong is likely here for a long time.

Menems term of the strong peso lasted for roughly ten years and devastated export industries throughout that time(which is Argentinas bread and butter)
Brazil back then in the late 90's had to devalue its currency and that sparked the Argentine disaster that already was there.
This will end the exact same way with or without Brazils help.

Beef is soaring as well as most grocery prices and restaurants are easily double from a year ago , yet the currency has maybe devalued by 20% since then.

Hold on to your Hats for sure. Argentina by the time this is over will become the most expensive country in the world, minus real estate.

Real inflation is easily closer to 10% per month. Their fake numbers are not to be trusted.

 

[LuckyLuke]

There is more here than meets the eye. It was announced not long ago that the $20 billion loan from Bessent was already repaid. There is no currency intervention this very moment in the FX market, in fact the BCRA is actively buying dollars to shore up foreign reserves without running into the unintended risk of the dollar hitting the top of the FX band. This could only be achieved with sufficient agro/import/foreign investment dollars incoming to avoid the BCRA buying too many of the small pool of dollars needed for export/foreign trade contracts..thereby causing a dollar shortage (rising dollar). The BCRA is also now providing "positive" interest rates, which further reduces dollar speculation.

These are the two requirements of the IMF that the BCRA has struggled to meet because of the delicate balance of import/export dollars. IMO, so long as this continues and the BCRA continues to show that there are sufficient dollars to meet national needs and that investing in the peso will yield a greater return, then it could remain stable for some time. There are many factors that could destabilize (foreign debt obligations, speculations, commodity prices, polticial instability, etc.), given the shortage of dollars which is why it's crucial the BCRA continue shoring up it's foreign reserves.

I want to point this out, because I see a lot expats here thinking all of this is artificial intervention. There is an organic part of this too. You have vast sums of dollars under the mattress that are losing to inflation right now. They are being invested, converted to plazo fijo, or sold to pay the rent. This could be a temporary effect, there are only so many dollars circulating down here after all. I think we'll see moments where the BCRA can relax and get help from the organic process and where momentary instability requires artificial intervention, but expats should prepare for the possibility of a lengthy process.

IMO, the situation here is actually quite scary for dollar earners because you have a huge cushion of black market dollars being liquidated that is allowing inflationary peso prices to essentially not show up in the dollar. In additon you have political instability/foreign trade embargoes in the US casuing a falling dollar at the same time. The result is quite disastrous for expats, as they will experience a continual erosion of purchase power from both sides with no real means of relief in the FX market.

 

[sergio]

Hold on to your seat, the overvalued/controlled peso will hold for a long time. Remember the Menem Convertibilidad (1:1 peso dollar) lasted for almost ten years....

It's hard to say. It may depend also on whether the Leader stays in power.

 

[nikad]

It's hard to say. It may depend also on whether the Leader stays in power.

I think the current administration has become dependent on the current US administration, so much that if one falls, the other one follows. Except for a few specific sectors, the economy is stalled here. Unemployment is on the rise and prices for most goods have become ridiculous considering the average income.

 

[Alby]

The result is quite disastrous for expats.

For expats who earn in USD. For others, the falling value of the USD helps, I believe?

 

[sergio]

I think the current administration has become dependent on the current US administration, so much that if one falls, the other one follows. Except for a few specific sectors, the economy is stalled here. Unemployment is on the rise and prices for most goods have become ridiculous considering the average income.

This is true. It is not at all clear that Republicans in the US will keep the White House. The economy is unstable there, inflation persists, jobs are being cut and there is disappointment with many who voted for the current Leader. If Democrats are back in it is almost certain that they will not be sympathetic to a right wing Argentine government. Without the IMF and US Treasury loans, what would the situation be in Argentina now?

 

[nikad]

This is true. It is not at all clear that Republicans in the US will keep the White House. The economy is unstable there, inflation persists, jobs are being cut and there is disappointment with many who voted for the current Leader. If Democrats are back in it is almost certain that they will not be sympathetic to a right wing Argentine government. Without the IMF and US Treasury loans, what would the situation be in Argentina now?

my guess is that it would be very unstable...