They're Coming For Your Dolar Blue Next!

[thomsono1912]

Thank you !!!!
Now I got it.
You saying it is a deterrant .... to hold onto the Dollars reserve.
Plain & simple, no big kahoonah theory or convoluted scheeming or strategy.
Thought there was a Winston Churchill at work here planning something big.

Sorry, it took me a while, I told you, I am not a major in economics.

*EDIT*:
Wait a minute here.
If CentralBank wants to make it harder to buy $US, it should be the other way around, they should make the official rate more expensive (not cheaper), so no one can buy it.
I mean if the real rate is $1US=$10ARS, Central Bank should sell official rate: $1US=$11ARS, this way no Argentine would buy $US.

Am I confused?

They want the Peso to be (or appear) more valuable, not less.

 

[Gringoboy]

My wife who is an accountant is still able to get AFIP authorisation for one or two of her clients.

 

[internationalguy]

Yes, people go to AFIP for legal official rate dollars. Getting the OK from AFIP is possible but for one thing it requires that you are working legally.

 

[EricLovesBA]

Khairyexpat, join the club! I too at various times have wanted to wrap my head around the mechanics of exchange rates. I'm not sure there really is a simple answer because the complexity is built in intentionally so that people don't understand how the middle class's wealth is being transferred away from them. Since the world left the gold standard, it's hard to grasp how our fictitious money can have any value, let alone how its relative value is determined. Ultimately it's a commodity and it represents the total international value and demand for goods and services purchased with that currency, which is to say the productivity of a particular economy, with the exception of the petrodollar.

Argentina uses all these controls listed on this timeline
http://www.bloomberg...s-timeline.html

There are numerous ways to control a currency, such as buying and selling on the open market like China, or interest rates like the US has done, or something structural like the petrodollar. Argentina doesn't really have the reserves or clout to use those methods, so they resort to a monopolistic control of local buying and selling. The mechanism of these policies is that they limit the free market purchasing of dollars with pesos, and the free market purchasing of dollar denominated assets with pesos. This creates a scarcity of pesos in the outside world. This can only go so far as Argentina is not producing too much that the outside world can't live without, so the international demand for pesos is not strong enough to make these policies too effective. So we can see that in the global market Argentina cannot control too much in the way that China does for example.
In the local market inside Argentina it seems that they can play around quite a bit however, and squeeze some water out of the Argentine economic stone. If we made an "I am a bill" Saturday morning cartoon, we would see the USD enter the country (tourism, soy export, etc), and it would discover that it can never escape. It cannot be bought by the citizenry to be reinvested or as a store of value. Rather it has one simple destiny: to be bought at a low rate by the government with tax generated or printed pesos, and to go toward payment of USD denominated Argentine debt. All this while using smoke and mirrors to make it look like our purchasing power is still okay and that our currency is not making a severe nosedive.

 

[Gringoboy]

My wife who is an accountant is still able to get AFIP authorisation for one or two of her clients.

That's obvious mate.
Who goes to AFIP if they're working in black?
The point I was trying to make is that it's still possible to get a meagre amount of dollars if you've got your house in order and you've got a foreign trip coming up.

 

[Gringoboy]

Yes, people go to AFIP for legal official rate dollars. Getting the OK from AFIP is possible but for one thing it requires that you are working legally.

That's obvious mate.
Who goes to AFIP if they're working in black?
The point I was trying to make is that it's still possible to get a meagre amount of dollars if you've got your house in order and you've got a foreign trip coming up.

Sorry, double post.

 

[Dublin2BuenosAires]

Steady on fella....your having double post conversations with your alter ego here :huh:

 

[Gringoboy]

I'll take one now and one after supper.

 

[khairyexpat]

(USD is) to be bought at a low rate by the government with tax generated or printed pesos, and to go toward payment of USD denominated Argentine debt. All this while using smoke and mirrors to make it look like our purchasing power is still okay and that our currency is not making a severe nosedive.

Thanks Eric.
I am still mulling on your above statement.
I think it holds the key to the beginning of an explaination.

You're saying: Argentinean gov. created this official rate for themselves to buy USD @ that fake rate (only locally inside Argentina) And Argentina has no economical clout to force this fake rate on other nations.

Meanwhile Argentinean citizens are forbidden from buying the same USD @ that same fake rate).

 

[nicoenarg]

The point is not that Argentine citizens can't buy USDs at this rate. The point is that Argentines (if they go through banks) are forced to sell their dollars at this crazy rate. The government gets dollars on the cheap, which is what the government wants.