Milei minister hints new exchange rate of 650 pesos

[sts7049]

you clearly have no idea what you are talking about.

the exchange rate has been artificially suppressed. your pesos should already be worth close to the blue officially. that is what the market believes it's worth

 

[Redpossum]

you clearly have no idea what you are talking about.

the exchange rate has been artificially suppressed. your pesos should already be worth close to the blue officially. that is what the market believes it's worth

You didn't use the reply function, so it's hard to tell who you are saying has no idea what they're talking about, but if you are replying to the immediately previous message by Ries, then I'd have to say his post made no sense to me either. I read it three times, then shrugged and gave up. That business of making your dollar worth half as much as yesterday, umm, but the official dollar is a fiction, a fairy tale.

Obviously the Blue Dollar is the true market value. Any capitalist worth his salt should be able to see that as plain as the nose on his face, but I have noted that the basics of Capitalism 101 are no longer as universally understood as was once the case.

 

[sts7049]

yes, i was replying to Ries

 

[Ries]

My point is simple. When they do this, the peso will buy less. Everything will be more expensive.
And it will not end the Blue. Its merely a way of spreading the economic disaster over time, rather than having it happen all at once.
All his plans will screw the average low income argentine.

 

[FrankPintor]

You didn't use the reply function, so it's hard to tell who you are saying has no idea what they're talking about, but if you are replying to the immediately previous message by Ries, then I'd have to say his post made no sense to me either. I read it three times, then shrugged and gave up. That business of making your dollar worth half as much as yesterday, umm, but the official dollar is a fiction, a fairy tale.

Doesn’t the 27% devaluation in the official rate after the PASO that immediately caused monthly inflation to jump to 12% simply reflect what @Ries wrote?

Tras la devaluación, la inflación se disparó a 12,4% en agosto y fue la más alta en más de 30 años

La suba de precios luego del salto del dólar tras las elecciones internas y la generalización del impuesto PAIS a las importaciones a fines de julio impactaron fuertemente en el valor de los alimentos; acumula 124,4% en doce meses

www.lanacion.com.ar

What would an almost 100% devaluation translate to in terms of inflation? Since the yellow press here has taken to describing the monthly inflation this year as “Massa’s inflation“, I hope they’re honest enough to describe the expected 20% inflation for December as “Milei’s inflation”.

Obviously the Blue Dollar is the true market value. Any capitalist worth his salt should be able to see that as plain as the nose on his face, but I have noted that the basics of Capitalism 101 are no longer as universally understood as was once the case.

You write that so assuredly, but isn’t the Blue Dollar better understood as a small, volatile, even easily manipulated part of the market? There are many other exchange rates to aggregate in order to assign a reasonable market value to the Peso.

 

[antipodean]

My point is simple. When they do this, the peso will buy less. Everything will be more expensive.
And it will not end the Blue. Its merely a way of spreading the economic disaster over time, rather than having it happen all at once.
All his plans will screw the average low income argentine.

And how is that any different from the past two decades… when the peso started out as $1 to $1 and has now, before Milei even coming into the picture, arrived at $1000 to $1? Things are not exactly cheap today in December 2023 for the average wage earner on ARS 200.000 to 300.000 (who looses purchasing power of at least ARS 34.000 of that wage to inflation over the course of each month and who earns still more than the minimum wage of ARS 156.000 but less than the canasta básica of ARS 345.000 in November 2023???)

Cue the gaslighting, collective amnesia and romanticization of poverty under political sloganeering, it seems we are about to be told by some that Argentina is facing inflation, devaluation and high cost of living for local low income earners for the first time in history “por Milei”.

 

[TimeTraveler]

Assuming they could actually declare an amount, and make it stick, wouldnt this devalue the worth of everybody's pesos by 100%?
First we hear inflation is bad. Then the answer is, make everybodys pesos have half as much value?
How, exactly, is this different from the inflation?
I guess it happens faster. Rather than Peronists making your peso worth half of what it was a year ago, the Libertarian makes it worth half of what it was worth yesterday.
Thats Progress for ya.

A central bank can only determine the exchange rate if they have sufficient reserves to sell dollars as needed. That’s not the case with the BCRA so a devaluation is the only option.

 

[Quilombo]

My point is simple. When they do this, the peso will buy less. Everything will be more expensive.
And it will not end the Blue. Its merely a way of spreading the economic disaster over time, rather than having it happen all at once.
All his plans will screw the average low income argentine.

I think we're kidding ourselves if anyone thought Massa wouldn't have devalued either, a BCRA dollar of 360, and even one of 650 is untenable, the true value of the peso is somewhere between CCL/MEP and blue, and the longer this charade exists that it's less than all 3 the more damage it does to the average Argentine because of the distorting effects it has on the macroeconomy.

Doesn’t the 27% devaluation in the official rate after the PASO that immediately caused monthly inflation to jump to 12% simply reflect what @Ries wrote?

I actually think this proves what others are saying: prices rose 12% and not 27% following the devaluation because many companies/businesses already use the MEP/CCL/Blue as a reference price as they can't access the MULC for capital goods, inputs, or supplies. The problem of dismissing a devaluation as simply reducing the savings of the poor is that it ignores the fact that nobody minus the few companies that have hard to get SIRA licenses operated as if a dollar cost only 360 pesos.

Devaluations cause inflation yes, but they also can lower the brecha which redirects much needed dollars to the BCRA, which as the Ks are always saying, is the cause of inflation in the first place (lack of reserves), and is a good thing whether we dollarize or not. My opinion is that we should bite the bullet, devalue to the average MEP/CCL price at close of business last night, and then maintain a crawling peg of the BCRA dollar with MEP/CCL. This will make it so you don't have to have all these convoluted schemes to encourage exports which don't even achieve their targets. Would any of us sell our dollars for $360 or $650 each? No, of course not, so why do people think businesses will do anything except sell the exact minimum needed to keep the lights on, especially when they believe dollarization is on the horizon?

 

[FrankPintor]

I think we're kidding ourselves if anyone thought Massa wouldn't have devalued either, a BCRA dollar of 360, and even one of 650 is untenable, the true value of the peso is somewhere between CCL/MEP and blue, and the longer this charade exists that it's less than all 3 the more damage it does to the average Argentine because of the distorting effects it has on the macroeconomy.


I actually think this proves what others are saying: prices rose 12% and not 27% following the devaluation because many companies/businesses already use the MEP/CCL/Blue as a reference price as they can't access the MULC for capital goods, inputs, or supplies. The problem of dismissing a devaluation as simply reducing the savings of the poor is that it ignores the fact that nobody minus the few companies that have hard to get SIRA licenses operated as if a dollar cost only 360 pesos.

Devaluations cause inflation yes, but they also can lower the brecha which redirects much needed dollars to the BCRA, which as the Ks are always saying, is the cause of inflation in the first place (lack of reserves), and is a good thing whether we dollarize or not. My opinion is that we should bite the bullet, devalue to the average MEP/CCL price at close of business last night, and then maintain a crawling peg of the BCRA dollar with MEP/CCL. This will make it so you don't have to have all these convoluted schemes to encourage exports which don't even achieve their targets. Would any of us sell our dollars for $360 or $650 each? No, of course not, so why do people think businesses will do anything except sell the exact minimum needed to keep the lights on, especially when they believe dollarization is on the horizon?

I believe Massa is on record as saying the various exchange rates had to be unified, implying a devaluation. I don't know who would be kidding themselves about that.

I think the 27% official rate devaluation resulting in a 12% monthly inflation jump reflect the fact that the official exchange rate (and, for that matter, the Blue rate) are relevant to a small part of the economy. Most of the economy has moved to rates closer to the Blue/MEP/CCL or whatever. Even if you don't want to admit it, Massa has already done most of the hard work of moving the economy closer to a "real" exchange rate , if in a piecemeal fashion with multiple exchange rates that he stated need to go away.

My question is, why is Milei doing what Massa would have done anyway? Is 650 any more defensible than 364? Wasn't Milei elected to dollarize the economy, which would imply immediately removing the managed exchange rates?

 

[perry]

I believe Massa is on record as saying the various exchange rates had to be unified, implying a devaluation. I don't know who would be kidding themselves about that.

I think the 27% official rate devaluation resulting in a 12% monthly inflation jump reflect the fact that the official exchange rate (and, for that matter, the Blue rate) are relevant to a small part of the economy. Most of the economy has moved to rates closer to the Blue/MEP/CCL or whatever. Even if you don't want to admit it, Massa has already done most of the hard work of moving the economy closer to a "real" exchange rate , if in a piecemeal fashion with multiple exchange rates that he stated need to go away.

My question is, why is Milei doing what Massa would have done anyway? Is 650 any more defensible than 364? Wasn't Milei elected to dollarize the economy, which would imply immediately removing the managed exchange rates?

Milei said the casta would pay for the economic troubles of Argentina now its the pobres who earn dos pesos cincuenta who will have to pay !