What's Next With The Peso Devaluation?

[Bajo_cero2]

I for one, am very curious to see how long Argentina will be able to rely car export to Brazil as the following happens:

1) Brazilian economy slows down and demand for autos decreases.
2) Argentina's increases the "beggar thy neighbor" export policy towards Brazil while continuing to block Brazilian products (via customs and now via devaluation).
3) Increased political pressure from Brazilian Unions against Argentina auto exports as local factures lay off workers (http://goo.gl/DMryYS)

Ok, i couldn t find the article that explained that, when a company has factories in Argentina and Brazil, they distributed the production in the way i described.

WV for example, produce in Argentina the Amarok and the Suran while the Gol is made in Brazil. The gol is the cheapest of the 3.

As soon as you invented a situation that doesn t exist, it makes no sense to debate it.

The point is that it is cheaper to produce in Argentina. And a devaluación makes it even cheaper.

 

[camberiu]

Ok, i couldn t find the article that explained that, when a company has factories in Argentina and Brazil, they distributed the production in the way i described.

WV for example, produce in Argentina the Amarok, Suran

Whoever wrote such an article, has no idea what he/she is talking about. For example, Peugeot is now transferring all of the production of the Peugeot 207 to Argentina to make room to the more expensive Peugeot 301 to be made in the plant in Brazil. The criteria was never (expensive in A and cheap on B ). It has a lot more to do with logistics, demand and optimal utilization of the manufacturing facilities.

 

[Bajo_cero2]

Reneige, there is over 300 billion argentine usd abroad. This is the key of the Problems of this country. Nothing new, that why the farmer's unión said that they have the usd this country needs.

If you read carefully, companies cannot buy usd.

 

[John.St]

As things stand right now, Argentina is losing dollar reserves at a rate of 1.1 billion dollars a month. Which would be somewhere around $13 billion dollars a year. Reduced imports and increased exports will change that, of course.

Yes, that is a very serious problem, which is difficult to solve as e.g. Argentina's import restrictions tends to isolate her.

January 23, 2014: "INDEC: Trade surplus fell by 27% during 2013 ... INDEC has confirmed that Argentina's trade balance during 2013 left a surplus of 9.24bn dollars, falling by more than a quarter compared to the previous 12 months." http://www.buenosair...-27-during-2013

 

[John.St]

Reneige, there is over 300 billion argentine usd abroad. This is the key of the Problems of this country. Nothing new, that why the farmer's unión said that they have the usd this country needs.

The real key to some of Argentina's economic problems is identical to the reason why those 300 billion US$ have been moved abroad - a complete lack of confidence in an erratic government and the corralito and corralón in living memory.

 

[AmigoArtistico]

As soon as you invented a situation that doesn t exist, it makes no sense to debate it.

That's exactly why I don't respond to most of your posts.

 

[AmigoArtistico]

... there is over 300 billion argentine usd abroad. ...

And why do you suppose that is?

 

[Bajo_cero2]

The real key to some of Argentina's economic problems is identical to the reason why those 300 billion US$ have been moved abroad - a complete lack of confidence in an erratic government and the corralito and corralón in living memory.

Which one? It began in 1975. Google "rodrigazo".

 

[Reneige]

Yes, that is a very serious problem, which is difficult to solve as e.g. Argentina's import restrictions tends to isolate her.

January 23, 2014: "INDEC: Trade surplus fell by 27% during 2013 ... INDEC has confirmed that Argentina's trade balance during 2013 left a surplus of 9.24bn dollars, falling by more than a quarter compared to the previous 12 months." http://www.buenosair...-27-during-2013

Yes, many people (myself included) often erroneously describe a current account deficit as as a trade deficit, rather then jump into the complexities of the balance of payments. Argentina does in fact have a trade surplus, the problem is the massive outflow of capital. But the only way to prevent capital outflow is to create confidence in the countries currency and economic prospects. The only way to achieve this is to have credible institutions such as an independent central bank, strong leadership, and educated/economically literate citizens (if we are referring to a democracy), Argentina seems to fail on all these fronts. Instead you have deceiving and ignorant (or perhaps criminally negligent) political class that is happy to sell out the prospects of a generation for a vote. To quote today's Financial Times, “The chickens of populism have come home to roost,” (re quote from Arturo Porzecanski economist from Uruguay).

I don't think anybody sees a way out now, Cristina included. The government today vowed not to allow the currency to slide any further but as long as reserves fall, this country is headed for a Currency Crisis / Balance of Payments Crisis.

 

[Bajo_cero2]

That's exactly why I don't respond to most of your posts.

I really apriciate it.