Spike In Blue Rate

[lamarque]

I would sell my car to buy dollars at $6 ...ªª there would be a run on the CB reserves

Jaja who wouldn't do it, lol, i will sell the house if that price would be available, but that is not the price that the dollars is been controlled at , anyway the normal argentine traveller will use the credit card and a little little quantity of blue dollar for some cash use.

 

[Splitty]

Has anyone successfully used an Argentine debit card outside of Argentina lately? (without the raised letters and in a swipe machine).
I am going overseas Monday and the bank told me many people use it like that.

 

[Inferno.]

A band-aid is not going to fix anything if you have a broken femur. All the measures taken so far are an example of what you don't have to do! The blue rate has not only spiked, it has set a new value for the national currency. If the government wants to devaluate, it can't not go now for a value below the blue rate. A 40% devaluation of the official rate is 7,14.. which is now an awesome price to get dollars due to everything that has happened. An illegal market as it's called, it's now calling the shots and keeps raising the bar. What are they going to do? Devaluate 80% at 9.14? Political suicide before elections, but a good price to set things.

But they can't do that with all the other restrictions that they have in place, because even at 9, the price will go up again if this is not in the open market. It's an economical suicide to keep it like this putting dumb measures without thinking the consequences. Even if they do that, the inflation will spike too, so it's like trying to extinguish a fire with gasoline.

I'm following up this issue since it began.. and I truly believe that after elections something big will happen. They are going now for the stock market (contado con liqui, changing how the ADRs in argentina are treated to avoid money going to another country).. so they will at some point limit the debit and credit cards, something like an annual USD limit. I really see this happening in the future, not now.

Let's hope I'm wrong.

 

[scotttswan]

Rural society are saying there's no more soy to sell right now so no dollars for Cristina from them.

http://www.buenosairesherald.com/article/126938/rural-society-says-theres-no-soy-to-liquidate

 

[expatinowncountry]

I know that is supply and demand, but when there is a big player like the government, they can put the price down by ofering more the question here is if they are willing to do it in the long term with the leak of dollars this produce or if they are just wanting to let it grow but without peacks so it dosn't catch so much attention, anyway at 8,5 on the moment there is a relative small demand and offer as well, by just putt some fresh dollars on the market it can retain it on that value without so much of a hassle, of course not forever and i don't thing is their intention neither, at 6 there will be a huge demand but at 8,5 not, as people will use the credit card when they can in this moment, now a day people buy the minimum possible at blue and the rest they pay with the credit card at least the majority, but as the demand is very small and limited the price of the blue continue going up, the average person here is not willing or able to pay 8,5 per dollar, they use the CC as much as possible before getting dollars at that rate of course with the time they will get use to that price specially when the government put more and more taxes to the credit cards and barriers to get dollars but by that time the blue will be much higher for sure.

How big the government a player is depends basically on many factors (it was also the largest player in Dec 2001....). The government has $42B in reserves but it has a huge potential liability called the monetary base (those little papers with Roca on it). It is not obliged by law to change those dollars per pesos as the convertibility law was finally annulled in 2011 BUT if the government wants to defend the value of the peso (=keep inflation low) it needs to keep the exchange rate at bay.
Your argument has a little problem on it... when people use the credit card abroad (or buy a service abroad=flight) to get the official exchange rate instead of the blue... what do you think the sellers abroad get? They get dollars! Who provide does dollar? The Argentine Central Bank. So the problem is not only the demand (and supply) of dollars at the blue rate, it is mostly the demand for dollars at the official rate. The higher the blue rate, the higher the demand for official dollars, that is why the government cares about the blue.

The problem comes from the fact that the official exchange rate is too low to be an equilibrium exchange rate. If it was higher, demand would be equal to supply and the government would not lose reserves. Why the government does not increase that official exchange rate? Two reasons (1) It will increase inflation as imported goods would be more expensive in pesos (2) it will need to print more money or have a larger fiscal surplus to be able to buy the dollars from the exporters. Print money=inflation, larger fiscal= higher taxes or lower government spending. As the government does not have access to international credit markets, the (almost) only way they can get dollars is "buying" them from exporters.

Incidentally, the Argentines are also a big player in the exchange market. They hold more dollars than the Central Bank. More Argentines would be happy to sell dollars if its price was "right".

 

[trennod]

But expatinown country, could they not just allow the offical rate to devalue, which would arguably increase exports and thus increase dollars coming in to the country given the exporters still have to convert their dollars at official rate (its law anyway). Then, if the official rate decreases, potentially it would decrease demand from purchases etc abroad and thus they wouldnt be losing dollars from that aspect.

Or, have they done the maths (wouldnt surprise me if not you know) and it works out better this way, having them being able to buy the dollars at the lower official rate given the proportion of exports denominated in USD (soya, girasol et al).

 

[mdb73]

Than a simple word comes to mind...inflation...and we all know there is no inflation here...

 

[lamarque]

How big the government a player is depends basically on many factors (it was also the largest player in Dec 2001....). The government has $42B in reserves but it has a huge potential liability called the monetary base (those little papers with Roca on it). It is not obliged by law to change those dollars per pesos as the convertibility law was finally annulled in 2011 BUT if the government wants to defend the value of the peso (=keep inflation low) it needs to keep the exchange rate at bay.
Your argument has a little problem on it... when people use the credit card abroad (or buy a service abroad=flight) to get the official exchange rate instead of the blue... what do you think the sellers abroad get? They get dollars! Who provide does dollar? The Argentine Central Bank. So the problem is not only the demand (and supply) of dollars at the blue rate, it is mostly the demand for dollars at the official rate. The higher the blue rate, the higher the demand for official dollars, that is why the government cares about the blue.

Ok aparently you didn't understand at all what i say, read my post again, there isn't any place where i put that this fix any problem, less even the true problem, of course people use dollars when they expend on the credit card, no one say that the credit card is a magic box, if you buy outside the country the central bank is paying dollars outside and charging you pesos at the oficial rate, so that add to the point if the diference between the oficial and the blue become so big then the people is more prone to spend on the CC as they percive it as if they are having a big discount on their pucharge outside the country, in the other hands if both blue and oficial are more similar in value then you avoid part of that effect but still not all because to fix all the mess you have to stop inflation, stop doing stupid anunce that cause panic on the people and investors, stop expropiating companys, and a long list of things that this government will not do, so the only measure you can see is a short term control on the peaks of the blue dollar with luck, no more than that.

 

[lamarque]

Sure you mean the ratio ? 1.2910 or $10.66 pesos.??? Someone may need Euros?

the ratio between dollar and euro, the ratio of the day we make the transaction, yes 1.291 or the one of the day you exchange, i can sell you 5k euros if you are interested or anyone here in any case

 

[florence]

Has anyone successfully used an Argentine debit card outside of Argentina lately? (without the raised letters and in a swipe machine).
I am going overseas Monday and the bank told me many people use it like that.

e
I am interested in this as well. Can I use my Argntine debit card in the U.S.? Or do I have to get an Argentine credit card?