New official exchange rate: 800 pesos per dollar

[gringoexpress]

However, in August a jump in the official exchange rate from 300 to 367 Pesos / Dollar led to the Blue Dollar rate jumping from 605 to 720. What's different now?

the larger the gap, the more money there is to be made by arbitraging the gap. make the gap small enough and it no longer becomes economically viable to arbitrage, or at the very least results in a much smaller number of players attempting to arbitrage the gap

in simple terms, the closer the dolar oficial is to blue the less motivation there is for people in cuevas to make money buying and selling the gap between the two. the smaller the brecha, the less silly crazy stuff you see happening because of a distorted market.

 

[TonyTigre]

How about a scenario in which Argentina exports increase dramatically in the coming year due to less restrictions, favorable exchange rate, and better weather (more rain) while at the same time the US start cutting their interest rate? Add to that a balanced budget in Argentina, and the exchange rates could be quite different than some are hoping for in two years. Of course it remains to be seen whether those things will happen, but Milei's plans so far seems promising to me.

 

[FrankPintor]

the larger the gap, the more money there is to be made by arbitraging the gap. make the gap small enough and it no longer becomes economically viable to arbitrage, or at the very least results in a much smaller number of players attempting to arbitrage the gap

in simple terms, the closer the dolar oficial is to blue the less motivation there is for people in cuevas to make money buying and selling the gap between the two. the smaller the brecha, the less silly crazy stuff you see happening because of a distorted market.

Is 20% not enough margin for arbitrage?

 

[Caribbean Cool]

Mathematics inflation is 30 % per month and the blue rate is not devaluing 30 % per month . Within 6 months meat can be minimum 2 times dearer in us dollars

I see it. A package of precooked ribs went from 4100 last week to 5500 today. And I was just looking at the KANSAS menu and though I do not have a list of the exact old price.....I think it was 11000 to 12000.....it is now 16000 for ribs and things on the menu are 20,000. It was never that high before. These are serious increases. Sad.

 

[Johnny]

My favorite chocolate bar cost slightly more than $2,000p yesterday. Today they rang it up for $4,500p. When I find out who is responsible for this there is going to be hell to pay.

 

[on the brink]

If we don't buy non-essentials, prices should go down. Eventually....

 

[gringoexpress]

Is 20% not enough margin for arbitrage?

If I'm a soy farmer, a brecha of 350 pesos oficial to 1000 blue, plus what I'm saving on taxes, makes smuggling my crop across the river to Paraguay a pretty appealing proposition. For 20%, am I going to risk it? Does that even cover transportation and bribes? Just one example. Not everyone is stuffing benjamins in their hollow peg leg, and some forms of arbitrage no longer make sense with a smaller gap.

 

[gringoexpress]

If we don't buy non-essentials, prices should go down. Eventually....

that isn't how it works. their inputs were subsidized. now that those inputs are no longer being subsidized, they will not be able to replace the product they sold for cheap. unless someone is going out of business, they're not going to let go of stock for less than it would cost to replace.

 

[devilclam]

And dollar tarjeta is like 1320.

Help me out here – in my mind, I saw that and thought, "Oh, there's more incentive to use my card now because the tarjeta dollar buys more pesos now," but looking at my transactions, it still looks like the 950 rate.

Do we think credit card companies (Visa, in this case) will catch up to the new rates and reimburse the difference of recent transactions or stay at the old fixed rates?

 

[AdrianB]

Help me out here – in my mind, I saw that and thought, "Oh, there's more incentive to use my card now because the tarjeta dollar buys more pesos now," but looking at my transactions, it still looks like the 950 rate.

Do we think credit card companies (Visa, in this case) will catch up to the new rates and reimburse the difference of recent transactions or stay at the old fixed rates?

Dollar tarjeta is not what you think it is. It is the rate used by cards issued in Argentina when paying abroad. So the higher it is, the worse it is for the card owner.