Post Elections, The Blue Dollar, And The Economic Horizon

[GS_Dirtboy]

I watched a lot of expats celebrate after the mid-term elections. Many are telling me now the future of Argentina looks bright and cheery.

Am I missing something?

Whatever government gets elected in 2015 will inherit the same situation that we are in now. International credit for the government doesn't exist. The Dollar reserves that they use to pay energy and bond invoices are dropping. Argentines have very little confidence in the government and therefore Capital Flight will continue. It is a vicious cycle and I don't see Dollar controls being lifted.

What I think is certain is the Peso will continue to devalue. It is devaluing at a much faster rate than it was before the elections. As it approaches what would be the real float rate I think the Blue will retreat back a bit.

What about import controls?

There are also rumors that real estate transactions will be forced through the Central Bank. That's bad news for foreign owners for lots of reasons including that you won't be able to get Dollars for your property. Only Pesos that you'll be forced to change at the blue rate.

What do you guys think?

GS

 

[Rich One]

Can only see that come December with the Holidays and the aguinaldo the dollar blue will Fly. And if new restrictions are enforced on the dollar turista more fuel.... ! 2015 is too far away to predict. depends on too many issues....!! Who knows?

 

[French jurist]

What do I think? I wouldn't bet much on any scenario for the two years to come.

There was a La Nacion article summarizing quite well the short term situation http://www.lanacion.com.ar/1636653-tras-las-elecciones-devaluan-al-40-anual
- Indeed, the official peso rate is getting devalued quicker since the elections (this should apply for the short term future)
- The Central Bank reserves lost 3.160 B$ between September & October (getting quite low now)
- Rumors about an imminent "desdobliamento" (likely what Kiciloff was aking for? Higher dollar for turists & such, etc.)

I'm almost ready to buy a house in BA or a piece of land in Patagonia (my black truffles production project, he he). So I guess if the rumors "[background=rgb(252, 252, 252)] that real estate transactions will be forced through the Central Bank[/background]" become true, then the Real Estate prices will go down, right?

For the Dolar Blue, indeed, it should go up in one month but since this rate can also be manipulated to some extent, who knows...


The next two years will be a very special period in Argentina
- Somehow the end of the reign of Cristina Kirchner (will it be consensual or conflictive?)
- What about the health of Cristina Kirchner? (could have a big impact too)
- Not really sure that Massa can succeed on a national scale (Scioli getting elected while apparently taking distance from the Kirchnerism and negotiating secretly with it?)

Weird...

 

[dennisr]

Do not think all of Christina's health issues are being revealed and is the big question in my view. The no flying restrictions placed by the medical community for two months does not make any sense. Heart problems may be worse than anyone is willing to admit? Otherwise, who knows what is in anyone's future. Hope for the best and prepare for the worst.

 

[John.St]

I watched a lot of expats celebrate after the mid-term elections. Many are telling me now the future of Argentina looks bright and cheery.

Am I missing something?

Yes, you are missing that long time planning in Argentina has a horizon of about 3 weeks, so as far as anyone can see, things are honky-dorey

Whatever government gets elected in 2015 will inherit the same situation that we are in now. International credit for the government doesn't exist. The Dollar reserves that they use to pay energy and bond invoices are dropping. Argentines have very little confidence in the government and therefore Capital Flight will continue. It is a vicious cycle and I don't see Dollar controls being lifted. What I think is certain is the Peso will continue to devalue. ...
GS

More reasons to be an optimist:

Foreign tourists spending dropped 30.9 percent, while Argentines spent 17.3 percent more abroad so the tourism sector’s deficit reached US$ 127 million for September, Argentina's biodiesel industry’s fight to survive, Argentine oil and gas output continues to fall, South African Airways has decided to cut the Buenos Aires route, Argentina may be kicked out of IMF and G20, Argentina will continue with its policy of 'containing' imports says Moreno, bread prices skyrocket because of lack of flour, ...

- but of course we must also expect some unpleasant things to happen.

Tout va très bien, madame la Marquise. (French and English text www.youtube.com/watch?v=rdLUV0hhYZY )

 

[mariano-BCN]

What do I think? I wouldn't bet much on any scenario for the two years to come.

There was a La Nacion article summarizing quite well the short term situation http://www.lanacion....uan-al-40-anual
- Indeed, the official peso rate is getting devalued quicker since the elections (this should apply for the short term future)
- The Central Bank reserves lost 3.160 B$ between September & October (getting quite low now)
- Rumors about an imminent "desdobliamento" (likely what Kiciloff was aking for? Higher dollar for turists & such, etc.)

I'm almost ready to buy a house in BA or a piece of land in Patagonia (my black truffles production project, he he). So I guess if the rumors "[background=rgb(252, 252, 252)] that real estate transactions will be forced through the Central Bank[/background]" become true, then the Real Estate prices will go down, right?

For the Dolar Blue, indeed, it should go up in one month but since this rate can also be manipulated to some extent, who knows...


The next two years will be a very special period in Argentina
- Somehow the end of the reign of Cristina Kirchner (will it be consensual or conflictive?)
- What about the health of Cristina Kirchner? (could have a big impact too)
- Not really sure that Massa can succeed on a national scale (Scioli getting elected while apparently taking distance from the Kirchnerism and negotiating secretly with it?)

Weird...

Frenchie:
1. So am I ready to buy a place to live here in bsars, but reading your text it seems it should better to wait? But do you think that prices will drop if there's such a regulation? It's the first time I hear about it by the way.
2. I would not underestimate the power of the K's to come back and point out a new leader and win coming elections. They're great in finding a way to tell people fantasies and let me people believe it. See the last elections...considering that they've nearly all the media against them I would have expected they were going to lose a lot. They r still a powerful movement, far away from death.

 

[French jurist]

Frenchie:
1. So am I ready to buy a place to live here in bsars, but reading your text it seems it should better to wait? But do you think that prices will drop if there's such a regulation? It's the first time I hear about it by the way.
2. I would not underestimate the power of the K's to come back and point out a new leader and win coming elections. They're great in finding a way to tell people fantasies and let me people believe it. See the last elections...considering that they've nearly all the media against them I would have expected they were going to lose a lot. They r still a powerful movement, far away from death.

1. We are in the same situation it seems and we both know quite well the country. My guess is that we -obviously- have a window of opportunity for the next 2 years (prices won't go up, rather down if you can get USDs). As for this regulation, I suppose GS Dirtboy would provide a better answer (I have no clue but if all those real estate transactions must go through a "bancarizacion" process, with the AFIP eventually asking for the origin of the funds, then many buyers might be reluctant to buy).


I've never bought real estate before so I'm quite a virgin regarding this aspect!

 

[ajoknoblauch]

I watched a lot of expats celebrate after the mid-term elections. Many are telling me now the future of Argentina looks bright and cheery.

Am I missing something?

Whatever government gets elected in 2015 will inherit the same situation that we are in now. International credit for the government doesn't exist. The Dollar reserves that they use to pay energy and bond invoices are dropping. Argentines have very little confidence in the government and therefore Capital Flight will continue. It is a vicious cycle and I don't see Dollar controls being lifted.

What I think is certain is the Peso will continue to devalue. It is devaluing at a much faster rate than it was before the elections. As it approaches what would be the real float rate I think the Blue will retreat back a bit.

What about import controls?

There are also rumors that real estate transactions will be forced through the Central Bank. That's bad news for foreign owners for lots of reasons including that you won't be able to get Dollars for your property. Only Pesos that you'll be forced to change at the blue rate.

What do you guys think?

GS

After the election results, euphoria may be unwarranted, but how would things look if the Camporistas had increased their presence in the Congreso?

 

[GS_Dirtboy]

Buyers are currently required to provide source of funds and people are still buying. It's the seller-side that has my attention. Let's take a simplified Bankarized scenario.

1. Foreign-owned property is listed for U$200,000.
2. Buyer agrees to U$200,000.
3. Bank says Dollars must be converted at the official rate. U$200,000 X 5.9 = A$R 1,180,000.
4. Seller will get A$R 1,180,000.
5. Now what? How does the seller get their funds? Convert to Dollars at the blue rate?
6. A$R 1,180,000 / 9.8 = U$120,408

 

[dennisr]

Frenchie, you need to close your Swiss bank account.

http://www.iprofesional.com/notas/174156-En-Suiza-cierran-cuentas-de-argentinos-con-saldos-menores-a-us5-millones-

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