Prices for all goods and services can now be shown in USD (or other foreign currencies) as from Friday

[antipodean]

El Gobierno confirmó que todos los precios de bienes y servicios podrán mostrarse en dólares: la medida regirá desde este viernes

Así lo anunció el ministro de Economía a través de las redes sociales. Los establecimientos comerciales deberán indicar el valor final del producto por unidad de medida

www.infobae.com

The government have announced a change to commercial law allowing prices to be legally shown in both USD (and/ or any foreign currency) and ARS for any goods and services. The prices shown must be the final price to be paid by the consumer at the till.

Until now, it has been illegal to show prices in USD (or foreign currency) for most goods and services in a B2C context, except a few things like real-estate.

Additionally from 28 February, the BRCA announced that consumers will have the option to pay via Argentine debit cards in USD or ARS at the moment of the electronic transaction (avoiding any possible FX fees, taxes or differences arising from the existing need to convert to ARS) allowing them to chose which of their accounts are debited.

As has happened in other countries who followed such bi-monetary practices as a tool to help get inflation / runaway prices under control, I suspect that hard currency prices should begin to stabilize and even start to reduce slightly now that consumers will have a more objective measure to keep track of, making it more difficult for sellers to get away with price speculation.

 

[Rich One]

Caveats.

1. The dollars are debited to you local Dollar debit account, Only when you have one.
2. The conversion ratio US$/Ars is at the vendors establishment Choice.

 

[antipodean]

Caveats.

1. The dollars are debited to you local Dollar debit account, Only when you have one.
2. The conversion ratio US$/Ars is at the vendors establishment Choice.

Regarding conversion, there is no conversion in any of this.

The seller can simply set one price in dollars and another price in pesos. Since they will now actually receive the same amount of dollars they are selling an item for (in cash or deposited directly into their USD merchant account if from a USD card transaction), if they wanted to incentivize sales in dollars they could simply offer more attractive prices in USD than ARS, or visa-versa.

Also banks/ payment platforms are obliged to offer businesses the same commissions/ fees for USD transactions as ARS transactions, meaning there should be no disincentive for sellers to accept dollars with equally favorable terms to ARS. Banks are also obliged to quickly open USD accounts for businesses that want them to be able to receive payments directly in USD.
Businesses (excluding banks and payment platforms) may of course choose whether they want to operate in USD or any other foreign currency or only operate in ARS.

The other caveat worth noting, is that any dollars held in special CERA holding accounts as part of the blanqueo will be able to be used freely in USD debit card transactions at any time without incurring penalty/ tax or waiting 1 year to have penalty-free access to them. The recent blanqueo, coincidentally, brought in more USD to the Argentine financial system ($20.6bn - which is currently located in these CERA accounts, plus another $3bn or so held outside of the Argentine financial system) than all of the privatizations of the 1990s combined ($18bn) - that is $20bn that Argentine sellers can and will be trying to get their own hands on with a market of at least 300.000 individuals.

 

[Rich One]

Regarding conversion, there is no conversion in any of this.

The seller will simply set one price in dollars and another price in pesos. Since they will now actually receive the same amount of dollars they are selling an item for (in cash or deposited directly into their USD merchant account if from a USD card transaction), if they wanted to incentivize sales in dollars they could simply offer more attractive prices in USD than ARS, or visa-versa.

1. The seller has a peso price for the item and will set a dollar price to exhibit based on ?? (hint, will divide by a dollar value?) . Or ? pick another number.
2. The customer before buying will compare to decide which price US$/Ars is more convenient..!

Am i Missing something?

 

[mikic007]

1. The seller has a peso price for the item and will set a dollar price to exhibit based on ?? (hint, will divide by a dollar value?) . Or ? pick another number.
2. The customer before buying will compare to decide which price US$/Ars is more convenient..!

Am i Missing something?

I'm missing the point why would anyone pay in usd, that cannot be freely bought. And how will be inflation measured, when sellers will higher prices in pesos to try to obtain more usd, which many people have no access to? My lizard brain cannot comprehend what this means and how will affect all in reality...

 

[antipodean]

1. The seller has a peso price for the item and will set a dollar price to exhibit based on ?? (hint, will divide by a dollar value?) . Or ? pick another number.
2. The customer before buying will compare to decide which price US$/Ars is more convenient..!

Am i Missing something?

The seller is free to choose their own price of what they think their product is worth to them and what they think their clients will pay, the buyer is free to choose what offered price they buy it for - for example:

• if a cafe owner wants dollars in his pocket he may choose to sell his coffee at US$3 a cup and ARS 6000 a cup respectively (with a pricing policy that has nothing to do with an FX rate)
• if a cafe owner wants pesos in his pocket he may choose to sell his coffee at ARS3000 a cup and US$6 a cup respectively (with a pricing policy that has nothing to do with an FX rate)
• if a cafe owner values his product in dollars and doesn't care either way, he may choose to sell his coffee at US$3 a cup and ARS 3125 a cup (with an internal pricing policy at official, or MEP, or CCL or Blue)
• if a cafe owner values his product in pesos and doesn't care either way, he may choose to sell his coffee at ARS 3125 a cup at US$3 (with an internal pricing policy at official, or MEP, or CCL, or Blue)
• mix any or all of the above

The law does not control or regulate price differences or conversions between currencies - it only states that whatever amounts are written on the price tag, are to be the final amounts the consumer will pay at the till. So don't expect to see the same policy or clean conversion in every shop or for every product! (Although eventually the shops will need to compete with one another...)

It is important to note that when the government announced this, they were clear that their expectations in the short to mid-term is that "luxury" products (e.g. those most commonly purchased by people with dollars) will be the most likely to first to see bi-monetary pricing. Want to buy an Audi or a bottle of Krug? Expect a better price in USD than ARS as no Argentine in their right mind wants to be sitting on so many pesos for an imported good. Want to buy a can of locally produced beans? Expect a better price in ARS than USD because the seller needs sheer volume to make money.

 

[sergio]

Four Seasons Hotel prices its brunch in USD (U$S 149)
Price is the same at Beverly Hills Four Seasons

 

[Rich One]

The seller is free to choose their own price of what they think their product is worth to them and what they think their clients will pay, the buyer is free to choose what offered price they buy it for - for example:

• if a cafe owner wants dollars in his pocket he may choose to sell his coffee at US$3 a cup and ARS 6000 a cup respectively (with a pricing policy that has nothing to do with an FX rate)
• if a cafe owner wants pesos in his pocket he may choose to sell his coffee at ARS3000 a cup and US$6 a cup respectively (with a pricing policy that has nothing to do with an FX rate)
• if a cafe owner values his product in dollars and doesn't care either way, he may choose to sell his coffee at US$3 a cup and ARS 3125 a cup (with an internal pricing policy at official, or MEP, or CCL or Blue)
• if a cafe owner values his product in pesos and doesn't care either way, he may choose to sell his coffee at ARS 3125 a cup at US$3 (with an internal pricing policy at official, or MEP, or CCL, or Blue)
• mix any or all of the above

The law does not control or regulate price differences or conversions between currencies - it only states that whatever amounts are written on the price tag, are to be the final amounts the consumer will pay at the till. So don't expect to see the same policy or clean conversion in every shop or for every product! (Although eventually the shops will need to compete with one another...)

It is important to note that when the government announced this, they were clear that their expectations in the short to mid-term is that "luxury" products (e.g. those most commonly purchased by people with dollars) will be the most likely to first to see bi-monetary pricing. Want to buy an Audi or a bottle of Krug? Expect a better price in USD than ARS as no Argentine in their right mind wants to be sitting on so many pesos for an imported good. Want to buy a can of locally produced beans? Expect a better price in ARS than USD because the seller needs sheer volume to make money.

Will see how this works out in the Marketplace. Guess that merchants in high end shoppings will implement this dual currency Pricing system . May not be adopted any time soon at corner verduleria..?
Dollar prices need adjustment if prices in ARS change up/down?
Price comparison will be complicated.
Coto ads in the media will be also in Peso/dollars?

 

[Rich One]

Four Seasons Hotel prices its brunch in USD (U$S 149)
Price is the same at Beverly Hills Four Seasons

OMG have mercy on us.

 

[LuckyLuke]

The seller is free to choose their own price of what they think their product is worth to them and what they think their clients will pay, the buyer is free to choose what offered price they buy it for - for example:

• if a cafe owner wants dollars in his pocket he may choose to sell his coffee at US$3 a cup and ARS 6000 a cup respectively (with a pricing policy that has nothing to do with an FX rate)
• if a cafe owner wants pesos in his pocket he may choose to sell his coffee at ARS3000 a cup and US$6 a cup respectively (with a pricing policy that has nothing to do with an FX rate)
• if a cafe owner values his product in dollars and doesn't care either way, he may choose to sell his coffee at US$3 a cup and ARS 3125 a cup (with an internal pricing policy at official, or MEP, or CCL or Blue)
• if a cafe owner values his product in pesos and doesn't care either way, he may choose to sell his coffee at ARS 3125 a cup at US$3 (with an internal pricing policy at official, or MEP, or CCL, or Blue)
• mix any or all of the above

The law does not control or regulate price differences or conversions between currencies - it only states that whatever amounts are written on the price tag, are to be the final amounts the consumer will pay at the till. So don't expect to see the same policy or clean conversion in every shop or for every product! (Although eventually the shops will need to compete with one another...)

It is important to note that when the government announced this, they were clear that their expectations in the short to mid-term is that "luxury" products (e.g. those most commonly purchased by people with dollars) will be the most likely to first to see bi-monetary pricing. Want to buy an Audi or a bottle of Krug? Expect a better price in USD than ARS as no Argentine in their right mind wants to be sitting on so many pesos for an imported good. Want to buy a can of locally produced beans? Expect a better price in ARS than USD because the seller needs sheer volume to make money.

The more I think about this the more I realize nothing is as it seems....

Milei is not dollarizing the economy. Milei has created a new currency and it's an Argentine Dollar, or as I like to call it "Milei bucks".

A physical dollar cannot be printed by Argentina. It cannot control it's distribution and redemption value in the United States. The value of the US dollar in the USA cannot be manipulated by the Argentine central bank.

Milei bucks on the other hand is a virtual currency tied to the MEP rate. It is no different than an $1 share of an index fund. It's redemption value in physical dollars is determined at the time of it's liquidation based on a market price (MEP) minus (government dictated) transactional fees.

Can Milei control the distribution of Argentine dollars, yes...by regulating the MEP market. Can Milei manipulate the value of the Argentine Dollar, yes by buying and selling it against the peso or restricting it's redemption quantity.

It is no different than a USDT in that it is "tethered" to the value of a real dollar. By like any other crypto scam, the actual value is determined the quantity of actual dollars the crypto company has banked compared to the quantity of "tethered" crypto dollars it has in virtual circulation on it's platform.

What does this mean? We are back to the convertibility mouse trap and suspension of belief. As long as an Argentine Dollar can be redeemed for a real dollar it's trust and value exists. However, if Milei is caught "converting" more Argentine dollars for pesos than actually exists in the BCRA, then a redemption run will expose it's true value.

Who are the winners, who are the losers?

Those doing commerce in Arg USD are neither. They are simply using one instrument that the government determines the issuance and value of (Arg dollars) instead of another (Pesos).

The winners as Sergio so astutely pointed out are those who are taking pesos or Arg dollars and converting them into physical USD cash or transferring them into USD accounts abroad.

The losers are those who are taking physical USD cash or dollars from abroad and converting them into Argentine dollars (i.e. blanqueo).

The corralito will happen again...but this time there are no physical lock boxes of real dollars being confiscated. Instead it will be your digital dollar accounts being restricted from redemption to physical cash or transference abroad causing it's convertibility value to fall.

Blue will once again represent a real USD and the Argentine dollar will simply be MEP for laymen, having no actual value beyond domestic trade.