Inflation March 2014-Now

[scotttswan]

I do not understand why blue is staying ? Even the gov has dollars, still, by economics 101, it should be 16 or 18?

They took away a huge part of the demand by letting anyone earning over 10k pesos buy at the official rate from the government.
Economics 101 supply and demand.

 

[Davidglen77]

Right before I left Buenos Aires in Oct 2014, I cashed in some dollars at $15,40 : 1, I thought it would be at least $20 : 1 by now. They (the government) are holding down the blue rate artificially now, as soon as Cristina is out of office, they are going to HAVE TO devalue significantly or the economy will bust. Then you will hear all of the choripan zombies that support her screaming "look what they´ve done to us now that Cristina is out of office" they have done these things before. Poor Argentina.

 

[Pensador]

The sky is falling! Wait lets prop it up so the next government is really in a mess.

Then what?

Blame it on the Americans! Oh yea great idea! Yes surely all the poor groveling ignorant idiots will buy that story!

I think your right.. Hey where do we stash all the cash we stole?

Bank of America!

Great Idea!

Winning!

 

[wongjoh]

They took away a huge part of the demand by letting anyone earning over 10k pesos buy at the official rate from the government.
Economics 101 supply and demand.

The ability to buy USDs at official rates came well before Vanoli (during Fabrega's tenure) and the blue was then trending up (that's when it hit 15 briefly). Therefore, I don't think it is the elimination of the "cepo" what is causing the tempering of the blue. From the news, a couple things happened shortly after Vanoli was installed: (1) harsh controls on cuevas / exchange houses -- several large ones were closed down / investigated; and (2) currency swaps with China.

If the article (posted sometime back in this forum) about determining the price of the blue is to be trusted, there are only a few "market-makers". So, in theory, Vanoli could impact both the demand (i.e., by taking out exchange houses / cuevas and thus removing the venue for large transactions) and the supply (i.e., limiting the market-makers) to drive down the blue for the rest of us. Apparently, Fabrega had some conflicts of interest in doing so. The currency swaps probably just helped extend a bit more rope on the import/export front (e.g., allow credit for car dealerships to pay for import vehicles, enable importers to pay for foreign purchases, large purchases from companies, etc.) and cover some of the USDs sold internally, but I have a hard time believing it has large impact on the domestic side -- we're basically small potatoes for those dollars.

That's my conspiracy theory at least ;-)

 

[garryl]

To me, harsh control of cuevas only makes blue go higher, man. And I am not sure China will continue to play with Argentina on swap, China is starting to have its own foreign currency problem this year.

 

[ElQueso]

Blue rate can't go higher because of the harsh controls on the cuevas. It's not a supply and demand problem as much as it is a comply or die kind of thing.

As wongjoh mentioned, the cuevas were attacked pretty seriously by the government. The cuevas kept letting the blue rate go up even though the government had been trying to stop the climb for at least a year maybe more by threatening them. After lead players were arrested, a bank lost its license to operate and surely other things, the cuevas made a deal with the government to keep the price down, or continue to get harassed, arrested and shut down. Every time things started to move up a little bit since then, the government has raided arbolitos that I'd never seen raided before and shut them down for a day. The one where I usually do business has been shut down 3 times in the last month and a half or so, always as the price was passing more than 10 or 20 centavos over 13. It's artificial now, and I don't think we're going to see anything much higher than 13 before Cristina's out of office, or something happens that effectively makes it difficult or impossible for Cristina to continue to harass the blue players.

Let's hope whoever inherits power will devalue the peso and give some slack to the blue rate until the official rate catches up. But I have no idea what the next two years are going to look like here.

 

[garryl]

Same happened to Thailand, the middle class decided not accept the election results, chased the prime minister out of the office, after she bribed the poor and controlled the voting tickets.

 

[garryl]

The Transcambio, which accounts 1 third of the change, has been closed by the government, tax id removed.

Earlier, in Nov 2014, they were one of the several companies that had been raided.

http://en.mercopress.com/2014/11/12/argentina-raids-71-banks-and-financial-entities-suspected-of-money-laundering

 

[Rich One]

Amazingly but the Indec inflation 0,9 % index and the Congreso 1,48 % are getting closer!! It may happen that they converge soon at around 1,2 %.....???? Plop.

 

[scotttswan]

Blue rate can't go higher because of the harsh controls on the cuevas. It's not a supply and demand problem as much as it is a comply or die kind of thing.

As wongjoh mentioned, the cuevas were attacked pretty seriously by the government. The cuevas kept letting the blue rate go up even though the government had been trying to stop the climb for at least a year maybe more by threatening them. After lead players were arrested, a bank lost its license to operate and surely other things, the cuevas made a deal with the government to keep the price down, or continue to get harassed, arrested and shut down. Every time things started to move up a little bit since then, the government has raided arbolitos that I'd never seen raided before and shut them down for a day. The one where I usually do business has been shut down 3 times in the last month and a half or so, always as the price was passing more than 10 or 20 centavos over 13. It's artificial now, and I don't think we're going to see anything much higher than 13 before Cristina's out of office, or something happens that effectively makes it difficult or impossible for Cristina to continue to harass the blue players.

Let's hope whoever inherits power will devalue the peso and give some slack to the blue rate until the official rate catches up. But I have no idea what the next two years are going to look like here.

If this was true, would there not also be a real black market where the dollar would be 16-18?