Odds Of New Corralito (Auto Conversion Of $ Acct To Pesos)

[EricLovesBA]

I still suspect that the legal purchase of dollars is a way to help the 1% convert their liquid pesos to dollar cash in a legal manner, with the insiders knowing that the reserves will be more or less completely depleted at the end of this regime, and a massive peso devaluation to follow. A clean exit strategy.

 

[jackbower]

Kirchners dollar saving scheme = Obamas MyRA ponzi scheme. In the end both governments are using your savings to prop up their own balance sheet. With the Fed slowly starting to taper their third round of QE, and the worlds biggest US Debt purchasers not wanting anymore US debt aka Bonds, who will they get to buy all their junk bonds? Why all you retirees with an estimated 5 trillion in savings thats who.

 

[jackbower]

I still suspect that the legal purchase of dollars is a way to help the 1% convert their liquid pesos to dollar cash in a legal manner, with the insiders knowing that the reserves will be more or less completely depleted at the end of this regime, and a massive peso devaluation to follow. A clean exit strategy.

it could very well be a smoke screen. At the same time I honestly think these econo muppets thought they could make people buy into it. Theyre just not very good salesmen. On the other hand, Obama cries on cue. Theres really no comparison, Obama is a much better shyster.

 

[ajoknoblauch]

it could very well be a smoke screen. At the same time I honestly think these econo muppets thought they could make people buy into it. Theyre just not very good salesmen. On the other hand, Obama cries on cue. Theres really no comparison, Obama is a much better shyster.

It's so satisfying to read incisive commentary with temperate language.

 

[Reneige]

Don't you read the news in Spanish? That story has been out for many days now.

Additionally, as usual for stories published in English, it has details missing and incorrect.

• The rule isn't new. It is a rule that had been in effect before, but had been suspended in 2006 when the gov't feared that the peso might be getting stronger than desired (how times have changed)
• The banks must divest themselves of dollar cash reserves by the end of the month, but have up to four months to sell off dollar denominated bonds
• There were estimates in at least one article of how many dollars need to be sold (I think it was in the order of $4,000 million)
• New dollar income from external sources (bank lines of credit, money from foreign bank holding companies, etc.) are not subject to the 30% limit

Anyway, this is what is pushing down the dollar right now, and possibly for the next few months, as the banks are flooding the market with dollars, and the selling of the soy harvest begins in March.

Thanks Amigo,

I have only been learning Spanish for a month and I read a bit of the local press but still struggle with some of it.

It's pretty ugly that the government is forcing a currency mismatch between the bank's assets and liabilities. Although, as I said in my previous post, I am no expert on commercial banks' operations and I do not know the extent to which Argentinian commercial banks can access greenbacks on international markets.

Reneige