Blue dollar hits a new historical record! 1,500 to $1 USD

[Mother Russia Argentina]

Anyone's guess. Just follow the real time rate yourself. No one can predict what it will do. Probably depends on what the government does and how much they intervene each day.

Dólar hoy, cotización del dólar, precio del dólar, dólar blue, precio histórico del dólar, valor del UVA | Dolarito.ar

Seguí la cotización del dólar minuto a minuto, compara cotizaciones, visualiza los valores históricos, conocé el precio del dólar, evolución del valor UVA

www.dolarito.ar

It can be very addicting to always watch the rate but also better sometimes to not be so focused on rate. Does anyone else look at the rate a few times each day like me? I have to stop.

 

[Faith]

It can be very addicting to always watch the rate but also better sometimes to not be so focused on rate. Does anyone else look at the rate a few times each day like me? I have to stop.

Yeah when I first moved here I was checking it all the time. I have my savings in dollars so I would always worry about it. But then you figure out you have no control over it and worrying about it every day isn't a good solution. So now I just look once I am going to wire in funds to pay bills. I try not to stress out about it. We are fortunate that both me and my spouse both have jobs.

 

[Avocado]

Many problems still out there. When government try to fix one thing, another thing breaks.

Después de una semana complicada, el Gobierno busca dar más señales al mercado sobre la deuda | TN

Los inversores ven con preocupación la dinámica de las reservas. Sin embargo, el Presidente ratificó que tendrá los recursos para afrontar los vencimientos en 2025 y confía en que la Argentina mejorará su perfil de deudor y bajará la tasa.

tn.com.ar

 

[Vince]

Whack a mole is correct! Read this article today. It sounds like this ain't going to be easy.

Argentina’s new bid to ‘sterilize’ peso emissions lowers parallel dollar rates… now what? - Buenos Aires Herald

While Milei says this is the first step toward lifting currency controls, critics worry about the depletion of international reserve

buenosairesherald.com

Looking back it seems like the government knows a thing or two about how to get the blue dollar from rising. Went back to look at some articles and it is amazing how correct they were.

 

[Uncle Wong]

Looking back it seems like the government knows a thing or two about how to get the blue dollar from rising. Went back to look at some articles and it is amazing how correct they were.

It is still all confusing for me to understand. When people say the government is "sterilizing the peso" what do they mean? Explain it like I'm an idiot.

 

[Wally]

It is still all confusing for me to understand. When people say the government is "sterilizing the peso" what do they mean? Explain it like I'm an idiot.

It is tricky but yes the government is controlling the currency. The "sterilization of peso emissions" which many consider a form of manipulation. I asked ChatGPT to explain it and here is what they said.

Sterilization Process​

The government has implemented a strategy to "sterilize" peso emissions by:

1. Buying U.S. dollars from exporters in the official market
2. Selling dollars in the financial market (known as the "Cash with Settlement" or CCL market) to absorb the pesos issued during the first step
   https://buenosairesherald.com/econo...issions-lowers-parallel-dollar-rates-now-what
   This process aims to prevent the newly issued pesos from flowing into the parallel dollar market, which could lead to an increase in the parallel exchange rate and widen the gap between the parallel and official dollar rates

Currency Manipulation Aspects​

While the government's intent is to stabilize the economy, this approach can be considered a form of currency manipulation for several reasons:

1. Artificial exchange rate maintenance: The government is actively intervening in the foreign exchange market to maintain a specific exchange rate, rather than allowing it to be determined by market forces
   https://buenosairesherald.com/econo...issions-lowers-parallel-dollar-rates-now-what
   https://buenosairesherald.com/econo...n-financial-market-to-sterilize-peso-emission
2. Multiple exchange rates: Argentina continues to operate with multiple exchange rates, including the official rate and parallel market rates, which is a form of currency control
   https://www.omfif.org/2024/07/the-imf-holds-the-key-to-argentinas-cage/
3. Restricted capital flows: The country still maintains some capital controls, known as "cepo," which limit the free movement of currency
   https://www.omfif.org/2024/07/the-imf-holds-the-key-to-argentinas-cage/
   Milei and Caputo view these measures as necessary steps to:

1. Reduce inflation
2. Stabilize the peso
3. Accumulate foreign reserves
4. Prepare for a potential future dollarization of the economy
   https://sites.lsa.umich.edu/mje/202...ential-dollarization-what-should-we-consider/
   https://www.economicsobservatory.com/what-economic-challenges-does-argentina-face-today

Economic Impact​

The sterilization process and related measures have had some initial effects:

1. Parallel exchange rates have decreased
2. The gap between official and parallel rates has narrowed
3. Inflation has shown signs of slowing, though it remains high
   https://buenosairesherald.com/econo...issions-lowers-parallel-dollar-rates-now-what
   https://www.economicsobservatory.com/what-economic-challenges-does-argentina-face-today
   However, these interventions come at a cost, as they require the central bank to use its limited foreign reserves and potentially increase the country's debt burden

 

[Uncle Wong]

It is tricky but yes the government is controlling the currency. The "sterilization of peso emissions" which many consider a form of manipulation. I asked ChatGPT to explain it and here is what they said.

Sterilization Process​

The government has implemented a strategy to "sterilize" peso emissions by:

1. Buying U.S. dollars from exporters in the official market
2. Selling dollars in the financial market (known as the "Cash with Settlement" or CCL market) to absorb the pesos issued during the first step
   https://buenosairesherald.com/econo...issions-lowers-parallel-dollar-rates-now-what
   This process aims to prevent the newly issued pesos from flowing into the parallel dollar market, which could lead to an increase in the parallel exchange rate and widen the gap between the parallel and official dollar rates

Currency Manipulation Aspects​

While the government's intent is to stabilize the economy, this approach can be considered a form of currency manipulation for several reasons:

1. Artificial exchange rate maintenance: The government is actively intervening in the foreign exchange market to maintain a specific exchange rate, rather than allowing it to be determined by market forces
   https://buenosairesherald.com/econo...issions-lowers-parallel-dollar-rates-now-what
   https://buenosairesherald.com/econo...n-financial-market-to-sterilize-peso-emission
2. Multiple exchange rates: Argentina continues to operate with multiple exchange rates, including the official rate and parallel market rates, which is a form of currency control
   https://www.omfif.org/2024/07/the-imf-holds-the-key-to-argentinas-cage/
3. Restricted capital flows: The country still maintains some capital controls, known as "cepo," which limit the free movement of currency
   https://www.omfif.org/2024/07/the-imf-holds-the-key-to-argentinas-cage/
   Milei and Caputo view these measures as necessary steps to:

1. Reduce inflation
2. Stabilize the peso
3. Accumulate foreign reserves
4. Prepare for a potential future dollarization of the economy
   https://sites.lsa.umich.edu/mje/202...ential-dollarization-what-should-we-consider/
   https://www.economicsobservatory.com/what-economic-challenges-does-argentina-face-today

Economic Impact​

The sterilization process and related measures have had some initial effects:

1. Parallel exchange rates have decreased
2. The gap between official and parallel rates has narrowed
3. Inflation has shown signs of slowing, though it remains high
   https://buenosairesherald.com/econo...issions-lowers-parallel-dollar-rates-now-what
   https://www.economicsobservatory.com/what-economic-challenges-does-argentina-face-today
   However, these interventions come at a cost, as they require the central bank to use its limited foreign reserves and potentially increase the country's debt burden

Thank you! Now I understand why they need all those other exchange rates! But what happens when they end the currency controls? Won't the exchange rate collapse??

 

[Stan]

Thank you! Now I understand why they need all those other exchange rates! But what happens when they end the currency controls? Won't the exchange rate collapse??

Well no one knows what will happen once the peso trades freely out of the control of the government messing around with it. This is why the IMF is requiring the cepo end before they give more money. They don't just want to give billions and have the government blow it on currency controls and playing around with the currency.

 

[Larry]

Well no one knows what will happen once the peso trades freely out of the control of the government messing around with it. This is why the IMF is requiring the cepo end before they give more money. They don't just want to give billions and have the government blow it on currency controls and playing around with the currency.

Well I don't know if they will end the Cepo anytime soon. The government is causing the middle class to go broke. Every one I know is selling their dollars just to pay their bills. This is getting very ugly for shrinking middle class. This carry trade can go on for a while. It is forcing people to get sucked into selling their dollars. There is talk of the blue dollar actually doing the unthinkable and going lower than the white dollar!

 

[BuySellBA]

Well I don't know if they will end the Cepo anytime soon. The government is causing the middle class to go broke. Every one I know is selling their dollars just to pay their bills. This is getting very ugly for shrinking middle class. This carry trade can go on for a while. It is forcing people to get sucked into selling their dollars. There is talk of the blue dollar actually doing the unthinkable and going lower than the white dollar!

Correct. We posted about this scenario here. As long as the Central Bank intervenes in the market this can continue. It was almost impossible for anyone imagining a scenario where the blue dollar is trading for less than the official rate but some are speculating this could happen.

https://twitter.com/x/status/1864095097609920985

 

[Jenn]

I don't understand how anyone can think this is normal! In my mind the exchange rate is totally fake if the government is just controlling it. My friends are shocked how quickly things changed and how expensive it is. My friend did a long term rental and she is paying the condo fees each month and it has gone up 2.5x since she started it. She said everyone in the building is late paying the dues.

She said all her other expat friends have already moved out of BA or will after their leases expire. A few already have just broken their leases and left because the fees just keep going up. It's not wonder the IMF will not agree to renegotiate or extend until they get rid of these crazy currency controls!

 

[import export]

I don't understand how anyone can think this is normal! In my mind the exchange rate is totally fake if the government is just controlling it. My friends are shocked how quickly things changed and how expensive it is. My friend did a long term rental and she is paying the condo fees each month and it has gone up 2.5x since she started it. She said everyone in the building is late paying the dues.

She said all her other expat friends have already moved out of BA or will after their leases expire. A few already have just broken their leases and left because the fees just keep going up. It's not wonder the IMF will not agree to renegotiate or extend until they get rid of these crazy currency controls!

No one thinks what is going on in Argentina is normal. Argentina never has been a 'normal' country. No one believes the exchange rates are normal. Things eventually correct to their true price. We will only know what fair value is when the currency is just floating freely without the government doing anything. That could be some time to come. Government has no incentive to stop doing this and I doubt the IMF will give more funds until they end the Cepo. Chicken and the egg.

Very true about people online complaining. I read more and more posts daily about this. This guy went from bragging how cheap Buenos Aires was to complaining daily about the rapid rise of prices.

https://twitter.com/x/status/1863646773627048096

 

[Johnny]

No one thinks what is going on in Argentina is normal. Argentina never has been a 'normal' country. No one believes the exchange rates are normal. Things eventually correct to their true price. We will only know what fair value is when the currency is just floating freely without the government doing anything. That could be some time to come. Government has no incentive to stop doing this and I doubt the IMF will give more funds until they end the Cepo. Chicken and the egg.

Very true about people online complaining. I read more and more posts daily about this. This guy went from bragging how cheap Buenos Aires was to complaining daily about the rapid rise of prices.

https://twitter.com/x/status/1863646773627048096

Well it sounds like in that building they weren't adjusting the expenses monthly. Many buildings from what I am told already adjust monthly. It sounds like the inflation is stabilizing. The buildings that get hit the hardest are buildings that have 24/7 security and doormen. Many new buildings are avoiding that and have video monitors in the lobby so they don't have to hire an employee. In my new apartment that I bought there is no doorman and I just bought another and also not going to be a full time employee. Lots of new buildings use these totem monitors.