Will The Cepo Be Lifted In Few Months?

wild_horses

Registered
Will the cepo be lifted in few months? According to some economic analyst the cepo will be lifted in few months, after the governament strikes a deal with the holdouts.

What is your opinion?

http://www.eldestapeweb.com/el-editorial-roberto-navarro-kicillof-quiere-abrir-el-cepo-n720
 

henryb

Registered
The depth of "some economic analysis" comes down to "Kicillof now wants to get rid of currency exchange controls, because Cristina has told him so". It is not evident where Mr. Navarro knows this from, but let's just say he overheard it somehow.

Yeah, they can remove the restrictions and dollar price will stabilize somewhere. There will be no "official rate", no "blue rate", just "dollars you can freely get from a bank" rate. I don't buy the idea that they will meet halfway. Why? If the blue rate is defined by supply and demand, shouldn't the new dollar price get closer to the blue rate?
 

wild_horses

Registered
The depth of "some economic analysis" comes down to "Kicillof now wants to get rid of currency exchange controls, because Cristina has told him so". It is not evident where Mr. Navarro knows this from, but let's just say he overheard it somehow.

Yeah, they can remove the restrictions and dollar price will stabilize somewhere. There will be no "official rate", no "blue rate", just "dollars you can freely get from a bank" rate. I don't buy the idea that they will meet halfway. Why? If the blue rate is defined by supply and demand, shouldn't the new dollar price get closer to the blue rate?
With all due respect, you need to learn a little bit more about the monetary market in Argentina. Blue dollar is only for poor desperate people who wants to buy a few bucks at the end of the month, people in white with job contracts can buy certain amount a month legally at official rate and if you take it out at the same time that you bought them you get them at around 10$.

What you need to focus is in contado con liqui (where you get bonds, sell them in foreign market and transfer the €$ wherever you want) , that is the operation that the big companies and people with millions actually use to get the money out of the country and it is at 11,98$.

I personally think that the analisys from Navarro is highly accurate.
 

wild_horses

Registered
I don't buy the "Hold Outs" story. It's small potatoes in the big picture. Holdouts = 1.5 billion +or-. And capital flight equals 2 billion a quarter. Loss of investment equals far more. And the Dead Cow looks more dead every day as oil prices tank.
Vaca muerta does not have nothing to do with it. Holdouts is about 20 billions, do your math. Once the governament strikes the deal can go to the markets to finance that debt. remember Repsol deal, in 1 day all the bonds where gone and they are doing very well. Do you know why is that?...
 

sleazemerchant

Registered
With all due respect, you need to learn a little bit more about the monetary market in Argentina. Blue dollar is only for poor desperate people who wants to buy a few bucks at the end of the month, people in white with job contracts can buy certain amount a month legally at official rate and if you take it out at the same time that you bought them you get them at around 10$.

What you need to focus is in contado con liqui (where you get bonds, sell them in foreign market and transfer the €$ wherever you want) , that is the operation that the big companies and people with millions actually use to get the money out of the country and it is at 11,98$.

I personally think that the analisys from Navarro is highly accurate.
With all due respect, YOU obviously do not understand the "money market" in Argentina based on the above statements. To begin with, the CCL market has been FROZEN since Vanoli replaced Fravega as head of the BCRA; that number you quoted is nominal as no transactions are taking place. Even when the CCL market was active, it was limited to people making their money in white. The "dolar ahorro" you are referring to is limited to a maximum of $2000 USD per month which is chump change. The only real FX rate in Argentina is the blue rate and the big players in the black economy use exclusively this market.

That being said, I would be the happiest guy in Buenos Aires if the currency controls were dismantled.
 

scotttswan

Registered
http://buenosairesherald.com/article/175461/vanoli-there-wont-be-a-devaluation-in-2015

but [background=rgb(252, 252, 252)]Vanoli says there's going to be no devaluation in 2015.[/background]
 

camel

Registered
Exchanging dollars for pesos in a cueva takes 30 to 60 seconds, and customer service is excellent. In a bank, I fear it would take 20-30 minutes with the usual bad bank customer service. I think I prefer the cuevas. (This doesn't mean I think this is what's best for the country - just best for me!)
 

EdRooney

Registered
Yeah i had a chuckle when i saw that Vanoli said that.

Thing is they didn't want last summer's devaluation either, but the fact is there are certain things that (shocking!) are outside of the BRCA's control. The last devaluation was just about certainly due to the flight from emerging markets caused by the fear of the end of Quantitative Easing in the US. Now that it seems QE actually has come to an end, and with Europe-- and most likely the US-- heading back into recession (+weaker growth from China), how do they expect to keep a lid tight enough on the peso to keep the current gradual devaluation, not to mention the shock that cepo-removal will have.

On the plus side for them (but not for the country), is the fact that Argentina has finally been infected by the global slowdown (2 quarters at -0.5%) which has slowed consumption and inflation, meaning there are now less surplus pesos to buy dollars. Sort of a case of "We had to destroy the (economy) in order to save it."

Thus in order for Navarro's fantasy (and it is very much a fantasy) to be fulfilled, either the government is going to have to give up on the idea of gradual deflation and allow a big shock to occur from the lifting of the cepo, or there will have to be a Deus ex Machina external effect that brings the contado con liqui down before the elections.

Doubt it.
 
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