Rent Increases

[citygirl]

Because I pay it in pesos (pegged to what that is in dollars). So let's say for arguments sake my contract is 1000 USD a month. In April '09, I would have been 1000 at a 3.7 exchange rate = 3700 pesos a month. Now if it goes up 10% in April '10, plus due to the exchange rate, that 1100 * 3.9 = 4290 a month or 16% more a month. Let's say the exchange rate goes up again to 4.2 - that rate in pesos continues to grow and my rent increase continues to go up.

 

[SaraSara]

Is your income in pesos or in dollars? I would think it best to pay rent in whatever currency you are earning (horrible English, sorry) and forget about the exchange rate.

Sadly, I have a dollar income and peso expenses. Not pretty, and getting uglier by the month both here and in Uruguay.

 

[nikad]

Slightly out of topic, but I think the dollar will catch up with inflation towards the middle of the year...

 

[bloody_bloo]

I just am concerned that if the peso continues to drop against the dollar (and I think it will) that 10% plus change may wind up being 20% or more in a year.

Rest assured it will happen. Peso will depreciate abruptly in less than a year or so.

This happened before many times.

The main reason for this cycles (I'm certain we are at the end of one) is because of the increasing budget deficit and over subsidized economy, all this driven by constant rises in state salaries due to unrivaled demagogy combined with a total lack of preparation dealing with unions.

You should negotiate a rental fee in local currency and in the worst case fix some inflation rate to compensate.

 

[gouchobob]

I think what people are trying to say is that inflation here is outstripping the gradual devaluation of the peso, which means the COL is increasing significantly for people relying on dollar incomes from overseas. This has been going on for several years now. The only good news is that the peso was only one of a handful of currencies losing ground to the dollar in the last year.

Right now it looks like the devaluation of the peso will continue perhaps accelerating in 2010, which is a result of government policies which are driving up inflation and devaluing the currency. The dollar looks a little better now because of the problems with other currencies, notably the Euro.