Value Of The Usd V.s. The Peso

[camel]

Search the title at google, then click on the mobile version

Here ya go: https://www.google.c...President Macri
click on first result

 

[TrevorCito]

Thanks everybody for your excellent ideas about this.

Given that the price is set by supply and demand, could it be that the central bank here has turned off the printing presses to limit inflation and this has had a double effect of limiting the supply of pesos thereby driving up its value?

 

[EJLarson]

Here ya go: https://www.google.c...President Macri
click on first result

Holy crap! So the reason the peso's stable is because now that grownups are running the country, they can't keep the investment dollars out?

Man, who would have thought? Thanks for the great article. It's at least good to know there is a reason!

 

[garryl]

High interest rate causes peso to be strong in short terms, in the long run, either you have to print even more bills, which leads to higher inflation or your economy has to crash like 2001 Argentina.
In the near future, expats with dollars will have to suffer, many locals who do not have the income adjusted to the inflation also will suffer.

But I like this explanation: high interest rate causes strong currency.

 

[TrevorCito]

High interest rate causes peso to be strong in short terms, in the long run, either you have to print even more bills, which leads to higher inflation or your economy has to crash like 2001 Argentina.
In the near future, expats with dollars will have to suffer, many locals who do not have the income adjusted to the inflation also will suffer.

But I like this explanation: high interest rate causes strong currency.

Exactly what I think too. The currency is almost treated like it's part of a carry trade.

If inflation is running at say 30% and interest is 35% then the saver is up 5%. The reverse is also true too... Inflation at 40%, interest at 35%... the saver is down 5%

 

[TrevorCito]

Here ya go: https://www.google.c...President Macri
click on first result

Ok, so it's the 'supply side' of the equation. To much Peso demand, it seems, is driving up the value.

I wonder when an equilibrium will be reached because it's patently clear that the Peso is extremely overvalued.

 

[joeschmoe1920]

Thanks everybody for your excellent ideas about this.

Given that the price is set by supply and demand, could it be that the central bank here has turned off the printing presses to limit inflation and this has had a double effect of limiting the supply of pesos thereby driving up its value?

Yes. And the expectation is that this trend will continue, which pushes the peso even higher.

 

[garryl]

Yes. And the expectation is that this trend will continue, which pushes the peso even higher.

Based on the experience in other country, this trend makes the real estate price higher.

 

[Ceviche]

Based on the experience in other country, this trend makes the real estate price higher.

I am wondering people who signed up their rental leases last year...say in August/Sept/Oct etc..with 15% increase every 6 months..I am just wondering how they are managing their rents going to sky high price and peso going stronger!

 

[Roxana]

The article mentioned above doesnt mention the memory of the argentinian people, who after the "corralito" in 2001 doesnt believe in the bank institutions. As usual, big money takes advantage of the situation described.

If you want to know when the trend will change, follow the difference between the price to buy and to sell, when it gets bigger, that´s the time the trend will change.