If inflation really does turn out to be 30% this year, would it be expected that the peso dollar rate would also rise by 30% i.e. finishes around 18 or 19 pesos to the dollar? Logically to me this would make sense but I always sense with economics that I have it all wrong.
Inflation Dollar Question
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estebandepraga
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One must leave logic behind here in this ever-changing and never 100% predictable land of ours!
Ries
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I think it would be extremely optimistic to expect the dollar would gain that much value.
Many things in Argentina have been very cheap, by world standards, for years.
The end of the cepo means that some things will simply go up in cost.
Some of this will be because subsidies are dropped.
Other things will respond to world commodity prices, to more imports, and to vagaries of the argentine economy.
Ambev buys Quilmes, beer prices go up. Ambev is Brazilian/Belgian, dollars got nothing to do with it.
Many new microbrews hit the streets from local breweries, who routinely charge 40 pesos for a 333cc bottle.
Quilmes says- we are leaving money on the table selling liters for 20 pesos.
Subsidized argentine factories, which made relatively inexpensive items, are losing subsidies under Macri.
I just heard yesterday of a weaving co-op that may not be able to afford to buy materials.
Imports will replace them on the shelves, but will not be cheap.
Import taxes have not been dropped, import expenses, both black and white, are not going down.
If a local company can more easily export, say, Malbec, or belt sanders, or high fashion garments, and get world prices, they will also raise local prices.
There are many, many, more things going on here beyond the dollar/peso exchange rate.
Many things in Argentina have been very cheap, by world standards, for years.
The end of the cepo means that some things will simply go up in cost.
Some of this will be because subsidies are dropped.
Other things will respond to world commodity prices, to more imports, and to vagaries of the argentine economy.
Ambev buys Quilmes, beer prices go up. Ambev is Brazilian/Belgian, dollars got nothing to do with it.
Many new microbrews hit the streets from local breweries, who routinely charge 40 pesos for a 333cc bottle.
Quilmes says- we are leaving money on the table selling liters for 20 pesos.
Subsidized argentine factories, which made relatively inexpensive items, are losing subsidies under Macri.
I just heard yesterday of a weaving co-op that may not be able to afford to buy materials.
Imports will replace them on the shelves, but will not be cheap.
Import taxes have not been dropped, import expenses, both black and white, are not going down.
If a local company can more easily export, say, Malbec, or belt sanders, or high fashion garments, and get world prices, they will also raise local prices.
There are many, many, more things going on here beyond the dollar/peso exchange rate.
RodalfoWalsh
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I think inflation is going to be beyond 30% this year. I think the dollar will be a little under but not by too much, but really its like predicting next years weather at this point. There is an election in the US, Iran entering the global oil market, russia still fucking around in the ukraine, a recession in china.
Rich One
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Clearly the Argie Peso is overvalued...! Since Argies can go to Chile and Brazil and find prices extremely low , Brazil is Argentina's first trading partner this will create a serious deficit for Argentina pushing the dollar value up in the short run.
Girino
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I hope Macri will devaluate the pesos for real, as current prices are nowhere near attractive to foreign investors.
You have a crippled country, many lazy and subsidized workers, crime all over, heavy taxes on imports and even local things costs as much or more than in the first world for a fraction of the quality. Who would want to invest here?!
The only happy investors I have ever read about are those cutting corners and exploiting the locals.
You have a crippled country, many lazy and subsidized workers, crime all over, heavy taxes on imports and even local things costs as much or more than in the first world for a fraction of the quality. Who would want to invest here?!
The only happy investors I have ever read about are those cutting corners and exploiting the locals.
This would be similar to the question "Will Macri introduce a CEPO again"...
The higher the difference, the more market players would take the arbitrage opportunity, thus putting pressure on the blue dollar, so without restrictions on purchasing US$ officially, this won't happen.If you make further devaluation, prices will go even more up, since the economy here is heavily dollarized. I understand expats with bunch of dollars to change being happy about it, but many people are paying this overpriced products with third world salaries already... If dollar tomorrow is 19,you split my salary on half in less than 2 months. Even if I may be lazy worker, I still have to live...
Looks like the market predicts that the dollar will be around 17 by the end of the year. If that is the case and inflation does reach 30-35% this place will just keep getting more expensive in dollar terms. As an example I reckon a kilo of helado at Freddo will be close to 20 bucks by December which would be insane.
http://www.barchart.com/commodityfutures/Us$/argentine_Peso/AAF16
http://www.barchart.com/commodityfutures/Us$/argentine_Peso/AAF16
