Macri Our Saviour One And Only One Dollar...?

[ben]

1. At this point, bringing money into the country by cueva also costs, to the tune of 5%. So the difference would be negligible.

2. For people living in dollars, the changes will not last for long: once the devaluation is 'official', it will take little time for prices to adjust accordingly.

(This, notwithstanding Kicillof's assertions (after the last big devaluation) that devaluation should by no means translate to higher prices. You have to read it to believe it. These assertions were then enforced by fines against anyone displaying "antipatriotic behaviour".)

 

[glasgowjohn]

whatever happens there are still people who want to buy dollars without the government seeing waht they are doing . So the cuevas will still offer a few extra per cent to people with crisp 100 dollar notes . How much? We will have to see what the new government does when it takes power.

 

[davidtarbuck]

When I was down on Florida a few weeks ago, the quoted rate was 15.7. When I first visited in 2013 it was 9. Whilst good for those of us with dollars; it must be a nightmare if you're earning in pesos.

 

[thorsten]

When I was down on Florida a few weeks ago, the quoted rate was 15.7. When I first visited in 2013 it was 9. Whilst good for those of us with dollars; it must be a nightmare if you're earning in pesos.

It sounds good for people with US$, but given the actual inflation, your buying power did not actually increase. So it just didn't get worse like for people who earn in pesos.

 

[Rich One]

It sounds good for people with US$, but given the actual inflation, your buying power did not actually increase. So it just didn't get worse like for people who earn in pesos.

Why So? if you work en Blanco and your Union gets a yearly 40 % increase you are ahead of the Blue dollar gains...! FI the Bankers Workers Union and the Porteros with increases over 30 %.... Also Truckers and Subway workers! Don't underestimate the peso Earners.

Instead The Dolar Blue a year ago $13,90 yesterday $14,75 increase 5,65 %. Who's better OFF ?? with and inflation of 28 % p.a. ONE lost 22 % buying Power. ??

 

[rrptownley]

Has there been any precedence of a devaluation, lifting of a 'cepo', like this before?

In Argentina or abroad, it would be reassuring to have a picture of what to expect.

 

[Gringoboy]

That's an excellent question Richard and one which, in spite of Googling like mad, I'm unable to come up with much.
Wikipedia shows a list of countries with exchange controls but not much else.
Does the patient need shock treatment or more conservative management?

I found this and this so far.

 

[Rich One]

What does lifting of the Cepo mean? Does it mean you can go to the bank and pay cash for an unlimited amount of dollars at $14 pesos no questions asked?? The Removal of the Cepo will be gradual and will consist of pages of Considerations.

• Before the cepo in 2014, the dollar purchase amounts where limited and you had to have your AFIP papers in order.
• What about import licenses already approved or in the process at $9.60
• What about soya bean exports ? currently exporters receive a dollar of $5.60, removing the retenciones, will they get $14 peso dollar or a 250 % increase a Windfall profit of Six billion dollars.
• Wine, Pears, lemons etc. could double their exports
• Meat exports boom limiting local supply ... inflation.
• Energy imports become 70 % more expensive....!
• Etc.

 

[rrptownley]

I think something that everyone needs to understand in this country is that we have all been living on borrowed money, more exactly borrowed value of our peso.

All this prosperity we see in the restaurants and stores and cars on the street hasn't been paid for with true value, but borrowed value. The government has been propping up the currency's worth to keep voters happy but as reserves run out this is becoming unsustainable.

What devaluing the currency will mean — after having pegged the currency with a fake, hollow value for so long — isn't a return to normality, it isn't flu medicine, but a long, hard readjustment as we pay off all that borrowed value; it'll be more akin to chemotherapy.

Danny, in the film Withnail and I illustrates this rather nicely:

If you're hanging onto a rising balloon, you're presented with a difficult decision — let go before it's too late or hang on and keep getting higher, posing the question: how long can you keep a grip on the rope?

Well, Kirchnerism's balloon has been losing gas rather steadily and the next move will soon no longer be a decision. What the government has done so well though is hang on to the very end, to prop-up these untenable policies, breathing air into them to keep them going a little longer, so that they can leave with clean hands. The next chap to take control will unfortunately suffer a rather long drop. That there is artistry, the decada ganada. The measures they took to continue their economic policies were novel, imaginative and worked, to their own ends. Unfortunately none were implemented with any long-term plan or really any care for the future of the economy in mind, just popularity.

The readjustment will be hard, on those in power as well as on the people. Worst of all the conditions it is happening under are all unprecedented offering no foresight nor guide as to what to expect or plan for.
I just hope the populace has the patience to give a good government the time to properly bring the economy back onto a sustainable path.

 

[Gringoboy]

What is worrying is the thought of devaluation and how it will affect our every day buying power, such as it is.