Is the Exchange Rate Managed by the Government?

Joe

Registered
Looking at a one year chart of the US Dollar / Peso exchange rate it is moving in a straight line up and to the right. Exchange rates are notoriously volatile but there seems to be little volatility in the dollar/peso exchange rate. The peso has been losing about 7 centavos a month in value versus the dollar in a very consistent rate for the last year.

I have often heard from Argentines that they expect the devaluation to hasten after the election.

Since my Spanish is poor and I cannot read the business pages of newspapers and magazines, is it public information that the government manipulates the exchange rate or is it just rumor? And if they do manipulate the exchange rate, by what means do they do it?
 

rivardco

Registered
Yes, this subject gets suspiciously little discussion for the rate of increase!?!?!?

For expats to not enjoy a considerablly better financial situation (assuming there is an income in dollars and expenditures in pesos), that would suggest inflation / cost of living has increase greater than 20%.

Why are more people happy?
 

mini

Registered
rivardco said:
Yes, this subject gets suspiciously little discussion for the rate of increase!?!?!?

For expats to not enjoy a considerablly better financial situation (assuming there is an income in dollars and expenditures in pesos), that would suggest inflation / cost of living has increase greater than 20%.

Why are more people happy?
Yes, it has increased greater than 20% in the last couple years.
 

rivardco

Registered
and as a follow -up...

Some of the most brainy posts on this board (which, sadly, there are few) envision greater economic challenges for Argentina in the short run.

Does this not become attractive to expats too?
 
With the lack of products available (even finding decent bananas can be challenging), poor quality of what you do find and don't want to pay for, coupled with inflation on a daily rate (Everything from private medical coverage to Encargados' salaries) it should be about 5:1 to even be reasonable.
 

MikeB12

Registered
Joe said:
Looking at a one year chart of the US Dollar / Peso exchange rate it is moving in a straight line up and to the right. Exchange rates are notoriously volatile but there seems to be little volatility in the dollar/peso exchange rate. The peso has been losing about 7 centavos a month in value versus the dollar in a very consistent rate for the last year.

I have often heard from Argentines that they expect the devaluation to hasten after the election.

Since my Spanish is poor and I cannot read the business pages of newspapers and magazines, is it public information that the government manipulates the exchange rate or is it just rumor? And if they do manipulate the exchange rate, by what means do they do it?
Yes, the Central Bank manages the exchange rate. Its supply and demand like anything else, when the equilibrium price isn't to the Central Bank's liking, they interfere in the market. If they want the the peso to weaken they buy dollars from the market. If they choose to defend the peso from weakening they sell dollars.

It is thought the gov't wants an orderly decline of the peso, not a sudden one, which would be politically disastrous. But, now that the elections have passed economists predict the peso will weaken at a faster pace. A weaker peso makes Argentine exports more competitive globally, but leads to inflation within Argentina by making imports more expensive.
 

elhombresinnombre

Registered
All governments do this kind of thing. All governments have their own agendas regarding what they want to achieve and Argentina is no different in this respect.
 

nikad

Registered
Joe said:
Looking at a one year chart of the US Dollar / Peso exchange rate it is moving in a straight line up and to the right. Exchange rates are notoriously volatile but there seems to be little volatility in the dollar/peso exchange rate. The peso has been losing about 7 centavos a month in value versus the dollar in a very consistent rate for the last year.

I have often heard from Argentines that they expect the devaluation to hasten after the election.

Since my Spanish is poor and I cannot read the business pages of newspapers and magazines, is it public information that the government manipulates the exchange rate or is it just rumor? And if they do manipulate the exchange rate, by what means do they do it?
The government manipulates the exchange rates. For local news in English check http://www.momento24.com
 

rivardco

Registered
In one of my first posts, I inquired about the "standard of living."

Above a contributor suggests that the dollar vs peso should be 1 = 5 to be "reasonable." More than that, the contributor spoke of insuffiecient supply. If this is true, how does this affect others. Moreover, how does it affect Argentinians.

As I am living in Colombia, I have not noticed a "shortage" of anything?!?! I have been surprised at how nice everything can be, providing you can pay for it which most Colombians can not. However, for expats, the overall cost of living I would guess is 30% - 40$ less on most costs of living. Luxury items can be equal, or greater than in US.
 

fedecc

Registered
UIA (Unión Industrial Argentina) is a keyword. They are one of the major lobbyst for a devaluation, they allways are. They are having a meeting with the president today.
 
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