What happens if the peso is devalued?

[BA Barrio Busquador]

And indeed, is that likely to happen? What might trigger it? Would it happen before the election?

I'm interested to know what would be the social / economic impact of the peso being devalued.

Is it likely to be a re-run of 2002? If the peso became worth 1/2 of what it is currently against the US dollar i.e. from ~4:1 to 8:1 - is that conceptually different to 2002 when it went from 1:1 to 3:1?

Obviously it's going to take a lot more pesos to buy things, but do things also increase in face-value price? Do things become more expensive not only because you need 8 pesos today rather than the 4 you needed yesterday, but because they are also charging 10 pesos (either for the hell of it, or because of some impact of the devaluation)?

If someone can explain it in simple terms, or rather, give their opinion in simple terms, I'd appreciate it!

BABB

 

[Lucas]

What happens if the peso is devalued?

In very simple terms.....KAPUTT !

 

[BA Barrio Busquador]

If someone can explain it in simple but not too simple terms, or rather, give their opinion in simple terms, I'd appreciate it!

Tho' I get the drift, doesn't sound good!

 

[sergio]

Why even bother asking? You never know in Argentina. The place is unpredictable. There is no planning and no logic. They just cobble things together as they go along. Whatever happens, you can usually assume that it won't be very good for most people. Just go with the flow. Either that or leave. I don't see the alternative.

 

[Churchill]

The devaluation of the peso is inevitable, the speed of the devaluation may well be more important than the actual devaluation itself. If it is gradual and managed by the central bank then it will probably not lead to any panic amongst the general populace. However, if overnight the currency was to devalue then I think people may panic and start buying dollars, taking even more money out of the country, and all hell will break loose.

 

[AkBill]

They start taking all foreigners hostage and selling them back to their families in for crisp new yankee dollars

 

[steveinbsas]

However, if overnight the currency was to devalue then I think people may panic and start buying dollars, taking even more money out of the country, and all hell will break loose.

Who wants to be my neighbor?

 

[nikad]

Most people seem to think that nothing will happen until after next years elections.

 

[HenryNisental]

I have lived trhu dozens of peso devaluations.
Actually what they mean is an acknowledgment of the real value of it. Besides, most important items (homes, business, cars,etc) are quoted in US dollars anyway.
The first affected items are the imported items (electronics, cameras, etc), since they are paid in US dollars, but then just about everything start an inflationary spirol. The slowest to increase are generally food items, and locally made clothing and shoes,etc. The crisis of 2001 was not due to the devaluation per se, but the goverment order to freeze all bank accounts.
good luck henry

 

[Amargo]

qué le hace una raya más al tigre! Another devaluation will cause a crisis, the poor will be poorer, the rich will get richer. But we are used to it, I guess.