What do we think will happen with the exchange rate?

[lunar]

- but cheaper than inflation - MEP and the central bank removes those ARS from circulation, against a backdrop of higher and more rapid inflation/devaluation burning up ...

You've just invented a procedure that's the opposite of printing money and you've got to believe in this yourself, right?

 

[SinPulgas]

But rather than trying to crystal-ball the future, better just to pay attention to the news of the day and all the detailed policy changes that are happening every day to see how things are shaping up. The situation is fluid and one must assume prices will stay "expensive" indefinitely until solid facts start to say otherwise.

Best advice.

 

[SinPulgas]

You've just invented a procedure that's the opposite of printing money and you've got to believe in this yourself, right?

It's nothing new. These processes go on all the time here, especially the government letting inflation eat up all the peso denominated debt. Melconian talks about all of these things all the time. Surely he would have been doing them as well if Bullrich had become president.

 

[antipodean]

You've just invented a procedure that's the opposite of printing money and you've got to believe in this yourself, right?

Regardless if I believe or not the government's stated intention to reduce the supply of ARS in the short-mid term or if it would succeed.. if you give me the opportunity to receive payments in USD by taking away the excuse of my clients not to pay prices in USD using USD (e.g. limits on bank-bank USD transfers, what you can and can't use dollars purchased via MEP for, a huge brecha cambiaria etc.) then you can be sure that I am going to demand that I receive USD from my clients instead of ARS.

What then happens to the ARS, I then couldn't care less about providing I can still change back my USD to ARS as and when I need to spend ARS (e.g. wages).

 

[Che1990]

This article explains what experts think is happening, seems logical.

They plan to devalue the official dolar by 2% per month, so with such high levels of inflation the competitiveness of the new $800 rate will quickly disappear and drive up appetite for the parallel dollars, pushing their rate up again.

It’s in Spanish, but a translator would work:

El Gobierno vive su "veranito" cambiario: hasta cuándo puede durar | Perfil

www.perfil.com

 

[lunar]

They plan to devalue the official dolar by 2% per month, so with such high levels of inflation the competitiveness of the new $800 rate will quickly disappear and drive up appetite for the parallel dollars, pushing their rate up again.

So, when the official exchange rate went up from 360 to 800, it didn't drive up the appetite for the parallel dollar, but if it goes from 800 to 816, it will drive up the appetite for sure?

 

[SinPulgas]

So, when the official exchange rate went up from 360 to 800, it didn't drive up the appetite for the parallel dollar, but if it goes from 800 to 816, it will drive up the appetite for sure?

When the official dollar is rising by 2% per month, and inflation is rising by 30% per month, yes. But there are seasonal factors to consider as well, the biggest of those being the harvest, which is supposed to be a big one, providing a large supply of dollars which could keep the price suppressed for the next few months, which this year, with all the other changes, is an eternity.

 

[Quilombo]

When the official dollar is rising by 2% per month, and inflation is rising by 30% per month, yes. But there are seasonal factors to consider as well, the biggest of those being the harvest, which is supposed to be a big one, providing a large supply of dollars which could keep the price suppressed for the next few months, which this year, with all the other changes, is an eternity.

I think they're really counting their chickens before they hatch here. I keep hearing this line (similar to something K militants told me last year) and wondering about the following:

Let's say you're a farmer. Dry soybeans have a shelf life of years, and if Milei says the plan is to still dollarize, will you:

A) Export your soybeans when there are increased holdings, a dollar that pays 790 pesos, and inflation in pesos of 20%+ a month

or

B) Export the bare minimum to pay your bills, your workers, your suppliers, and wait until dollarization (or a devaluation in line with inflation/the end of the cepo)

I know which one I'd chose, and I can't help but have deja vu of Macri's "lluvia de inversiones" that was always on the horizon, but never came to pass.

Who knows, maybe we get to a point where Milei starts accusing the campo of being a bunch of Kulaks should the dollars not flow in come March...

 

[wrangler]

Let's see what happens. I think pricing will come down to supply and demand on most items. The one that concerns me the most is healthcare, followed by rent.

 

[Ries]

When has pricing ever come down, over the long haul, anywhere?
My guess is Argentina will become like Uruguay.
4 times the cost, in dollars, for everything.
After all, Uruguay has free foreign exchange rates, not dollarisation but no barriers to dollars coming and going. You can get dollars at the atm.
and Uruguay has the same basic shipping costs, and pays basically what Argentina would pay for any imports.
Uruguay has the magic "investors" and yet, somehow, its still expensive. The chinese built auto assembly plants there, the rich Norwegian guy Alex Vik builds luxury hotels and restaurants, hell, they even have a Trump Tower...
The "free market" tells us that the prices in Uruguay, and the wages, are what a Rio Platenese country will settle at.
If that were to happen here, the poverty rate would double.
Uruguayans are the first to tell you how only rich tourists can afford Uruguayan prices, and how wages there dont allow them to do much but just get by.
Please, explain how Argentina will magically be 1/4 the cost of Uruguay, or have prices "come down", if all the same geographical, FX, climate, and economic rules apply?