Spike In Blue Rate

[trennod]

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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?

Worked for me in Punta back in Jan with my Santander Rio debit card.

 

[expatinowncountry]

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).

If you devalue you create inflation. If the inflation rate is not that high, then yes you could increase competitiveness. But If the inflation rate is higher than the devaluation, then your real exchange rate appreciate (your exports are more expensive) so you need to devalue again, and when prices catch up, you need to devalue again, and again... leading to extremely high inflation and volatility. That is on the trade side.

On the financial side, if you know the government plans to devalue, you want to run away from your pesos or any financial stock in pesos promoting more capital outflows that more than compensate from the exports earnings.

The problem is NOT that there is not enough dollars around. There are far too many but they are hidden because of awful economic policy. While the Central Bank "only" has $40B in reserves, the Argentine private sector has more than $180B abroad in assets that they have taken out of the country to escape the government. On top of that, the Argentine private sector must have anything between $20B-$40B in Argentina but outside the financial sector (colchón). So you can see the magnitude of the tragedy...

 

[Somewhereinba]

I think the spike and following drop were expected, it should settle around the 8.2-8.4 mark which will offset the 20% tax.

 

[nikad]

The drop was caused by the government declaring a holiday for all exchange houses and informal sellers..... http://www.infobae.com/notas/702227-El-mensaje-de-Moreno-a-casas-de-cambio-No-hay-operaciones-hasta-el-lunes.html

 

[citygirl]

So once again this gov't is trying to intervene in the blue market and telling a market they don't control how they can handle operations and what the black market exchange range should be.

Yet again Alice, I've fallen down the rabbit hole.

 

[nikad]

So once again this gov't is trying to intervene in the blue market and telling a market they don't control how they can handle operations and what the black market exchange range should be.

Yet again Alice, I've fallen down the rabbit hole.

yep, and Mr Moreno said they do not want the blue dollar over 8.5... they declared a holiday yesterday and today until Monday.

 

[French jurist]

There's one thing I wonder: how is the Blue rate determined?

For the official rate, I guess all transactions are centralized/get aggregated through some kind of network, which makes it possible to reflect the offer/demand in real time.

But for the blue rate?!

Do they take into account the offer/demand in 4 or 5 major cuevas?

 

[TERKILD]

The hole point in this dollar/peso story is: NO one knows how much/little the peso is worth!
The blue market is so small that it does not say anything........Its smaller buyers, buying for savings, holiday etc.......on top, the goverment even try to control that, by dumping huge tranches of dollars, or forbid transactions.The official peso rate is of course totally random.
It would be funny to ask George Soros if he would like to buy the peso at 8.75 or 10 or whatever......I doubt he would!
The Venezuela Bolivar was around same level as peso when it got devaluated recently......the blue bolivar is now around 4 times the official. I would not be surprised if it could be same spread we are going to see here!

 

[trennod]

The blue market is probably bigger than you think, apparently the biggest players are actually smaller-medium sized businesses, its not just people who need dollars to go to Miami.

 

[Joe]

Before taking my flight to BA, I asked at DFW if they sold Argentina Pesos, I was quite surprised that they did but was even more surprised at the rate they were offering: 4.6 !!!