fetch rover
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1,500? Oh my. We were there just a few months ago and it was around 1000. We feel fortunate that when we lived in Argentina the exchange rate was fairly stable. That is far from the case now!
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I think this is a situation where the more the government tries to do, the more trust it loses. The more trust it loses, the more volatile the exchange rate becomes. The more volatile the currency is the more people will look for stability, and in this case towards the dollar. Hence pushing the value of the dollar up and consequently the value of the peso down.It's all complicated @FuturoBA. Even here most locals don't understand everything the government and Central Bank are doing. Here is an article today. The government keeps saying, "nothing has changed" but then things change. I don't know how the markets will take this on Monday. This article is saying the central bank will buy dollars at 900 and sells at 1400. That sounds like it's too good to be true. And anything that sounds too good to be true usually is.
Desde el lunes: tras la turbulencia del dólar, ¿cómo funciona la nueva medida que anunció Milei?
El Presidente anunció que buscará eliminar la última canilla de emisión de pesos con la intención de frenar la volatilidad del tipo de cambio y contener además los precioswww.lanacion.com.ar
Correct. Others made good points about when the government says one thing they mean another. The government in Argentina never admits they are scared until the day they have to admit they are scared. Also, it can be confusing because big announcements like this are done when the President is not even in Argentina and Caputo is releasing the news on X which can be confusing. You can see many economists are confused. In one of the articles someone posted Milei does speak about a possible 3,000 peso exchange rate if it wasn't for Caputo. All of these things can be confusing for citizens.I think this is a situation where the more the government tries to do, the more trust it loses. The more trust it loses, the more volatile the exchange rate becomes. The more volatile the currency is the more people will look for stability, and in this case towards the dollar. Hence pushing the value of the dollar up and consequently the value of the peso down.
And you're right @Betsy Ross nobody really knows what's going on. It reality, it may not be any policies that's affecting the exchange rate, but the uncertainty and anxiety itself making the market act irrational or not.
It seems like many economists are against this idea. Sure it might work but there might be some unintended consequences.I think this is a situation where the more the government tries to do, the more trust it loses. The more trust it loses, the more volatile the exchange rate becomes. The more volatile the currency is the more people will look for stability, and in this case towards the dollar. Hence pushing the value of the dollar up and consequently the value of the peso down.
And you're right @Betsy Ross nobody really knows what's going on. It reality, it may not be any policies that's affecting the exchange rate, but the uncertainty and anxiety itself making the market act irrational or not.
To be fair we had to suffer all of that for years before Milei came along to sort out the mess. Give him a chance.Now maybe some of you will see how crazy this administration is. Instead of just accepting the peso is over valued and people don't trust the government's plan and it is not working they do crazy thing like this. No one know consequence for this manipulation.
Milei cause big recession, job losses, worse situation with peso, no dollarization, no getting rid of CEPO, record high poverty level, still elevated inflation level. He never in Argentina and always traveling outside of Argentina.
Now some of you people see what I talk about
I don't think most people are blaming Milei for all the problems Argentina is having. Of course not all the blame on him. Just not a good idea to fly around the world accepting awards and then claiming he is probably going to win the Nobel prize. Makes him look silly and stupid when the exchange rate is blowing up and he has to manipulate markets.To be fair we had to suffer all of that for years before Milei came along to sort out the mess. Give him a chance.
It took a big dive this morning. Government hasn't done this sort of thing before. I wouldn't count what happens in only one day. You have to see what happens over the long term. I still would only recommend buying pesos as needed to pay monthly bills. I'm not buying more pesos than I need. I bought another month worth of pesos on Friday for August bills but will just wait and see how this plays out.Take the opportunity to exchange some dollars; it looks like the happy days of the dollar at $1500 are coming to an end.
Argentina to sell dollars in parallel FX market to shore up peso
Central Bank will sell US dollars in the country’s parallel foreign exchange markets starting Monday, says Economy Minister Luis Caputo.batimes.com.ar
It's like investing in blue chip vs penny stocks. Hold onto the dollar because in the long run it will win out.It took a big dive this morning. Government hasn't done this sort of thing before. I wouldn't count what happens in only one day. You have to see what happens over the long term. I still would only recommend buying pesos as needed to pay monthly bills. I'm not buying more pesos than I need. I bought another month worth of pesos on Friday for August bills but will just wait and see how this plays out.
Correct. Might be a solution for the gap but country risk has now gone up. Real life game of Whack a Mole.It is all very complicated. I read several articles and all sounds complex. It sounds like the government isn't the only one that can do this. I feel sorry with the locals that have to deal with all of this. I wonder why the government didn't do this from day 1? My feeling is that it solves one thing but breaks something else.
Emisión cero: cómo funcionará el mecanismo con el que el Gobierno busca bajar al dólar
El BCRA esterilizará a través de la venta de divisas en el mercado de valores la emisión de pesos que efectúa al comprar dólares en el mercado de cambioswww.infobae.com
This seems to be the case. It still sounds like no one knows long-term what will happen to the peso. All the articles I am reading on it sound like it might help blue dollar but cause another problem. Time will tell.It's like investing in blue chip vs penny stocks. Hold onto the dollar because in the long run it will win out.
That is a good explanation. Still, many economists are saying this isn't a good idea so the question then is do you trust this administration or those economists? Some of these are the same economists that said CFK and her administration and Alberto too were doing the wrong things.I would compare this to a company doing a stock buyback program using profits / cash flow generated from operations. That would be different from doing a stock buyback by issuing more debt which is more like what the previous administration did.
One thing to keep in mind about a stock buyback program is that timing and frequency of the purchases are not set in stone. Whether the program is effective in the long term depends on the fundamentals of the company. In this case, if Argentina is not issuing new debts to support this program, but only using a portion of their surpluses then I think it's a wise use of those funds.
Keep in mind that their actions have the effect of helping to keep inflation under control, which is important for the people most hurt by the recession and government spending cuts. So in effect, they are using the savings from reduced subsidies to help the poor. This is similar to how the local governments have a big increase in tax revenue collection from higher utility bills, and then part of those funds are then used to help those locals who need the help the most. So in effect, part of the subsidies still exist except it's moved from the federal level to the local level, and the subsidies are more targeted to those who really need it.
Limited and strategic intervention using budget surpluses should not be confused with previous administrations that kept borrowing / printing more money to basically bribe the voters in an unsustainable way.
As signs of Argentina start growing again this quarter, and especially next quarter, the level of intervention would be greatly reduced and perhaps no longer even necessary.
The truth is that nothing the administration have done so is new. It might be new to Argentina, but not new in this world. The consequences of their policies are also not new, therefore their mitigation plans are also not new. Of course the same plans don't always work due to various reasons, but there are also existing plans to deal with different outcomes. However, I think there are still plenty of reasons to be hopeful that this administration is on the right track.
@TonyTigre thanks for this Cliff Notes version. But isn't it still very important to build up Central Bank reserves? All these exchange rates seem convoluted and nuts. I hope this works out.I would compare this to a company doing a stock buyback program using profits / cash flow generated from operations. That would be different from doing a stock buyback by issuing more debt which is more like what the previous administration did.
One thing to keep in mind about a stock buyback program is that timing and frequency of the purchases are not set in stone. Whether the program is effective in the long term depends on the fundamentals of the company. In this case, if Argentina is not issuing new debts to support this program, but only using a portion of their surpluses then I think it's a wise use of those funds.
Keep in mind that their actions have the effect of helping to keep inflation under control, which is important for the people most hurt by the recession and government spending cuts. So in effect, they are using the savings from reduced subsidies to help the poor. This is similar to how the local governments have a big increase in tax revenue collection from higher utility bills, and then part of those funds are then used to help those locals who need the help the most. So in effect, part of the subsidies still exist except it's moved from the federal level to the local level, and the subsidies are more targeted to those who really need it.
Limited and strategic intervention using budget surpluses should not be confused with previous administrations that kept borrowing / printing more money to basically bribe the voters in an unsustainable way.
As signs of Argentina start growing again this quarter, and especially next quarter, the level of intervention would be greatly reduced and perhaps no longer even necessary.
The truth is that nothing the administration have done so is new. It might be new to Argentina, but not new in this world. The consequences of their policies are also not new, therefore their mitigation plans are also not new. Of course the same plans don't always work due to various reasons, but there are also existing plans to deal with different outcomes. However, I think there are still plenty of reasons to be hopeful that this administration is on the right track.
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