Prohibition on drawing from accounts in pesos from outside Argentina from April 3rd

[willwright]

This is a very extreme move and indicates a government running out of options. You would have to question the mental stability of anybody willing to invest or buy property at the present time. It appears getting your money out is becoming more and more questionable. The Peso is clearly overvalued and headed for a major devaluation. I'm not sure why the government has not allowed it to decline more rapidly versus the dollar. I would think a more consistent and orderly devaluation would have been more desirable than whats coming. I think the old axiom holds for Argentina "Only fools invest in South America for the long term".

 

[ndcj]

Yes most people I know who are making decent salaries are still approved at ridiculously low levels compared to their incomes -- ie 500, 1000 USD a month -- when real estate purchases are still in USD -- this makes even buying something en pozo hard since most monthly payments are higher than what they are approved to buy.

The permission for buying dollars for a property purchase is completely different than the routine "buying dollars to save them" permission. You have to show provenance of your savings for that. Notice too that most en pozo transactions now are the initial payment in dollars but the cuotas are in pesos.

In any case, if you're saving to buy a property here at a couple of thousand a month, you'd honestly do better with your money in a plazo fijo in pesos than saving in dollars under the mattress.

There's lots of "my friend" or "people I know" experiences being posted about the permission to change dollars. We all know that it's far from uncommon to be paid part en blanco, part en negro even in very large companies or even the public service. Unless you're intimately familiar with these people's true declared financial situation, it's not much data.

I was told that the formula is basically the first approximately $2300 per month is out of the question (salario minimo, vital y movil), after that, add in anything that AFIP knows about (credit card spending, cuotas for private schools or prepagas, etc) and you can have permission to change the rest in most circumstances.

Has anyone had any direct experience different than approximately that?

 

[Crema Americana]

I was told that the formula is basically the first approximately $2300 per month is out of the question.....
add in anything that AFIP knows about...
and you can have permission to change the rest in most circumstances.

How nice of them to give permission to exchange the rest.

Considering that a large amount of people do not earn over $3000 pesos a month (neither in blanco nor negro) they don't have the opportunity to buy dollars ever? Perhaps they too should have the opportunity to not see the money they worked so hard to acquire wither away in a peso bank account... or just exchange a few pesos for a trip abroad.

If the government truly had any confidence in the economy and the peso, they would allow people to do as they wish. Here's a thought... make the peso actually worth having.

I truly feel sorry for old pensioners that worked hard all their lives and saved.... they always get the worst of it.

 

[ndcj]

Considering that a large amount of people do not earn over $3000 pesos a month (neither in blanco nor negro) they don't have the opportunity to buy dollars ever? Perhaps they too should have the opportunity to not see the money they worked so hard to acquire wither away in a peso bank account... or just exchange a few pesos for a trip abroad.

Whether you agree with them or not, this is exactly what they are trying to stop. Ahorristas betting against the peso by madly converting every last centavo to dollars for the presumed eventual collapse. This is a self-fulfilling prophecy.

The reality is that if you're saving, the peso is a much more profitable currency at the moment, and has been for a long time. The government now guarantees up to ARS120.000 per deposit holder similar to FDIC insurance in the US so you are protected against a bank failure (though, to be fair, you are not protected against any shock devaluation of the peso), and plazos fijos at the BCRA reference rate pay 15% right now.

If you put the equiv of U$S20.000 (ARS80.480 at March 13, 2011) under the mattress one year ago, you'd have U$S20.000. If you had that same amount in a plazo fijo (12,02% at the same date for 365 days) you'd have $90.154, which at today's date is worth $20,677. In a CD in a US bank, you'd have $20.100.

 

[nicoenarg]

The government now guarantees...

Too bad its hard to trust a freakin' Argentine government.

 

[citygirl]

Going out of country and withdrawing 10k USD isn't going to work unless you're abroad for a long time -- daily limit withdrawal from your bank account when abroad is about 400 USD isn't it? I don't think you're allowed more even if you go into the bank and deal directly with the teller. So you're going to need 25 days abroad to withdraw 10k.

.

Oh yes, I was refering to the permatourists or people who have accounts outside of Argentina. So it's not "abroad" for them. They can simply hop on a plane, take out their money in dollars and come back here and do whatever they want. Hence my comment about being in better shape than locals who don't have access to accounts abroad.

Oh and ncdj - I do know, intimately, what my employees make And I do know what two of them have told me was the result of asking permission to buy dollars. One was denied entirely and the other had a very low limit given to her. So again, what should happen and what does happen are different things.

Does anyone not think that this was done in part to stem the flow of capital, esp dollars, from Arg? As much as they can force people to keep their money in pesos, they will do so. Because what do people do with their pesos? They're basically forced to go out and shop b/c otherwise, they're sitting on money that just continues to devalue. So it forces people to inject money into the economy - there simply isn't an option to save.

 

[citygirl]

Whether you agree with them or not, this is exactly what they are trying to stop. Ahorristas betting against the peso by madly converting every last centavo to dollars for the presumed eventual collapse. This is a self-fulfilling prophecy.

The reality is that if you're saving, the peso is a much more profitable currency at the moment, and has been for a long time. The government now guarantees up to ARS120.000 per deposit holder similar to FDIC insurance in the US so you are protected against a bank failure (though, to be fair, you are not protected against any shock devaluation of the peso), and plazos fijos at the BCRA reference rate pay 15% right now.

If you put the equiv of U$S20.000 (ARS80.480 at March 13, 2011) under the mattress one year ago, you'd have U$S20.000. If you had that same amount in a plazo fijo (12,02% at the same date for 365 days) you'd have $90.154, which at today's date is worth $20,677. In a CD in a US bank, you'd have $20.100.

And do you really think after 2001, any Argentine is going to trust in a gov't or a bank account to hold their money??? There is a reason for those absurdly high interest rates.

And you are looking at the official exchange rate when doing those conversion. If I had left my 20,000 USD under my mattress for the last year and went to change those dollars today at 4.75 (which is what I'm getting), I have 95,000 pesos. And I have had full access to that money in the event of an emergency, without it being tied up in a dubious (at best) banking system.

I know what I would do with that 20,000

 

[nicoenarg]

Does anyone not think that this was done in part to stem the flow of capital, esp dollars, from Arg? As much as they can force people to keep their money in pesos, they will do so. Because what do people do with their pesos? They're basically forced to go out and shop b/c otherwise, they're sitting on money that just continues to devalue. So it forces people to inject money into the economy - there simply isn't an option to save.

I think this is mostly because they want to contain the outflow of US dollars from Argentina. They need US Dollars to pay off their debts, they have been screwing up the economy for the last 9 years (inspite of GDP growth, or rather claimed GDP growth) and now they have run out of money. What do they do? Drastic measures. Control what people do with their money, control what businesses do with their investments and create an environment of fear and control. Cristina thinks that will help (or does she?) the economy, but it will only drive it further into the grave.

As for whether people will be able to save or not, no one in the government cares, as long as people are committing collective suicide in the interest of the great Argentine Republic, its all good! Thanks to J. Peron and his worshippers, individual freedoms in Argentina died a long time ago!

 

[surfing]

Whether you agree with them or not, this is exactly what they are trying to stop. Ahorristas betting against the peso by madly converting every last centavo to dollars for the presumed eventual collapse. This is a self-fulfilling prophecy.

The reality is that if you're saving, the peso is a much more profitable currency at the moment, and has been for a long time. The government now guarantees up to ARS120.000 per deposit holder similar to FDIC insurance in the US so you are protected against a bank failure (though, to be fair, you are not protected against any shock devaluation of the peso), and plazos fijos at the BCRA reference rate pay 15% right now.

If you put the equiv of U$S20.000 (ARS80.480 at March 13, 2011) under the mattress one year ago, you'd have U$S20.000. If you had that same amount in a plazo fijo (12,02% at the same date for 365 days) you'd have $90.154, which at today's date is worth $20,677. In a CD in a US bank, you'd have $20.100.

That all looks good on paper but in reality if you are living in a country with 25% annual inflation that $20,677 has the buying power of only about $15,000 as compared to a year earlier when you put in away. This is the downward spiral one gets caught in in such conditions.

 

[ndcj]

Oh and ncdj - I do know, intimately, what my employees make And I do know what two of them have told me was the result of asking permission to buy dollars. One was denied entirely and the other had a very low limit given to her. So again, what should happen and what does happen are different things.

And their credit card balances, their private school fees, their prepaga cuotas, how many dollars they've bought recently?

These are all taken into account supposedly. I'm not trying to be obtuse, but from the stories I've heard it doesn't seem to be terribly random once you consider what they take into account.

Does anyone not think that this was done in part to stem the flow of capital, esp dollars, from Arg? As much as they can force people to keep their money in pesos, they will do so. Because what do people do with their pesos? They're basically forced to go out and shop b/c otherwise, they're sitting on money that just continues to devalue. So it forces people to inject money into the economy - there simply isn't an option to save.

Obviously it's exactly what it was designed to do, I don't think there's any debate about that.

The USD continues also continues to devalue substantially relative to the rate you can obtain a CD at. The US inflation rate is around 2% per year and the best non-promo CD rate is around 0.5%. The problem is that, much like Argentina, the real inflation felt by people on the street is far, far higher than 2%.

Cash is not a good long term investment no matter what currency it is in, never has, never will be. Some people have this delusion that the US dollar is some magic investment instrument.