Banking Significant news about peso exchange rate

[Saraing]

http://www.lanacion.com.ar/1478649-...el-dolar-abriria-a-510-en-las-casas-de-cambio

 

[TechNow]

We live in interesting times. It still remains to be seen whether they can control the CCL dolar or the dolar bono. Maybe they can control the blue dollar, but I don't know if they can control everything else. It remains to be seen.

Of course, if they just opened up the official market a bit and let everyone buy $300-500 USD per month they could easily end all of this. Purchases by individuals for personal savings are nothing in the grand scheme of things. I think something like 120 companies account for 80% of all the dollars bought on the open market. Individual purchases are really insignificant.

 

[SargentAse]

We live in interesting times. It still remains to be seen whether they can control the CCL dolar or the dolar bono. Maybe they can control the blue dollar, but I don't know if they can control everything else. It remains to be seen.

Of course, if they just opened up the official market a bit and let everyone buy $300-500 USD per month they could easily end all of this. Purchases by individuals for personal savings are nothing in the grand scheme of things. I think something like 120 companies account for 80% of all the dollars bought on the open market. Individual purchases are really insignificant.

But with a shrinking national economy, a $12 billion USD energy bill, and the prospects for slower growth worldwide, trying to keep every single dollar is the easiest decision to make. Sure, they could do this and that to make Argentina more competitive and increase inflows of USD, but these are moves that have to be planned. The current government prefers the path of least resistance and political expedience. This is why they continually have to backtrack on so many decisions.

 

[TechNow]

But with a shrinking national economy, a $12 billion USD energy bill, and the prospects for slower growth worldwide, trying to keep every single dollar is the easiest decision to make. Sure, they could do this and that to make Argentina more competitive and increase inflows of USD, but these are moves that have to be planned. The current government prefers the path of least resistance and political expedience. This is why they continually have to backtrack on so many decisions.

That's why I am saying, I don't know if this is going to be effective or not. These kirchneristas have tried price controls for years now with food and everything else and it never worked.

Just because Aníbal Fernandez says the dollar is going to be worth $5.10 on Monday doesn't make it so. I can guarantee if the dollar is worth $5.10 on Monday they are going to run out of dollars to sell within 15 minutes because everyone is going to buy them all up. And who is going to sell their dollars for $5.10, really? What they are going to create is a shortage.

We will have 3 dollars... the official dollar at 4.50, the blue dollar at 5.10 sold by the biggest exchange houses, and a new underground dollar back at 6 sold by the small exchange houses.

You will have a black market spring up within the black market. The moment the government starts to control the black market, it is no longer the black market and a new black market will appear.

Very strange stuff indeed.

 

[SargentAse]

That's why I am saying, I don't know if this is going to be effective or not. These kirchneristas have tried price controls for years now with food and everything else and it never worked.

Just because Aníbal Fernandez says the dollar is going to be worth $5.10 on Monday doesn't make it so. I can guarantee if the dollar is worth $5.10 on Monday they are going to run out of dollars to sell within 15 minutes because everyone is going to buy them all up. And who is going to sell their dollars for $5.10, really? What they are going to create is a shortage.

We will have 3 dollars... the official dollar at 4.50, the blue dollar at 5.10 sold by the biggest exchange houses, and a new underground dollar back at 6 sold by the small exchange houses.

You will have a black market spring up within the black market. The moment the government starts to control the black market, it is no longer the black market and a new black market will appear.

Very strange stuff indeed.

If the restrictions on the sale of dollars don't change, then the only thing I can see happening is that the price of the black market dollar will go up. Perhaps they're betting on this, and hope that it goes up so high (>$6.00 ARS) that it will be unattainable for most. According to some news articles, people were less interested in buying at that level, which is why it has receded a bit from that level.

However, if this report is true, the government is officially acknowledging that the USD/ARS should be ~$5.10 ARS. Given the source (the government), $5.10 should be taken as a less than conservative estimate. Without addressing the restrictions, this will only fuel speculation that the peso is on the verge of a major devaluation, and could whet the Argentine appetite for a dollar at $6.00 or higher.

 

[NigjeFs]

These people ( the govt ) are very tricky, I remember when they lowered the usd in the middle of the campo protests, they kept it around 3 pesos for several months. 5.1 seems too cheap imho. Also they talk about exchange houses, not the small financieras or cuevas. As far as I know, exchange houses had to get Afip authorization to sell dollars to individuals. It is all really confusing at the moment. If I get the chance to buy at 5.1$ I will be all over it.

http://finanzas.iprofesional.com/no...unto-debe-valer-el-blue-si-quieren-sobrevivir

 

[Saraing]

Can someone please explain to me why buying dollars at $5.10 is more attractive than buying at $4.47 if the restrictions on buying are the same?

 

[NigjeFs]

Can someone please explain to me why buying dollars at $5.10 is more attractive than buying at $4.47 if the restrictions on buying are the same?

it is not clear to me either tbh, I think expatriado was dead on and this will end up in 3 different types of exchange rates.

 

[NigjeFs]

I guess Monday it will be a day to sit back with some pop corn and see what happens. I don´t think much will actually happen, more like a day with very little usd operations. It might all just vanish as the days go by ( like milanesas para todos, lcd para todos, pescado apra todos and this dolar para todos ) Could be Fernandez way of trying to show strength after all the pesification rumors from last week. But with these people really you never know

 

[TechNow]

I guess Monday it will be a day to sit back with some pop corn and see what happens. I don´t think much will actually happen, more like a day with very little usd operations. It might all just vanish as the days go by ( like milanesas para todos, lcd para todos, pescado apra todos and this dolar para todos ) Could be Fernandez way of trying to show strength after all the pesification rumors from last week. But with these people really you never know

Yes, I will be watching. I for one signed a contract to buy a new car in pesos, but if the dollar really goes to 5.10, I am going to cancel that purchase and buy dollars. I still can't imagine that anyone is going to sell dollars at 5.10 though. It goes against the market.

If there are actually blue dollars at 5.10 on Monday, there will be a blood bath of people selling Boden 2012 and buying dollars with those pesos. If I really believed this, I would be calling my broker now to sell the Boden 2012 as fast as possible. We are talking about a drop of 25% or more. Why would I wait to get official dollars in August if I can sell pesos now and get blue dollars?

 

[earlyretirement]

Yes, I will be watching. I for one signed a contract to buy a new car in pesos, but if the dollar really goes to 5.10, I am going to cancel that purchase and buy dollars. I still can't imagine that anyone is going to sell dollars at 5.10 though. It goes against the market.

If there are actually blue dollars at 5.10 on Monday, there will be a blood bath of people selling Boden 2012 and buying dollars with those pesos. If I really believed this, I would be calling my broker now to sell the Boden 2012 as fast as possible. We are talking about a drop of 25% or more. Why would I wait to get official dollars in August if I can sell pesos now and get blue dollars?

I totally agree. What kind of car did you end up getting?

 

[TechNow]

I totally agree. What kind of car did you end up getting?

A Toyota RAV4 4x4 with all the trimmings... leather, heated seats, etc. With the dollar at $6, I am stealing this car. I haven't closed the sale yet though. If I can get dollars for cheap on Monday there's no way I would spend my pesos on a car. It seems pretty hard to believe though. I don't know anyone who would sell dollars at 5.10 except the government.

 

[earlyretirement]

A Toyota RAV4 4x4 with all the trimmings... leather, heated seats, etc. With the dollar at $6, I am stealing this car. I haven't closed the sale yet though. If I can get dollars for cheap on Monday there's no way I would spend my pesos on a car. It seems pretty hard to believe though. I don't know anyone who would sell dollars at 5.10 except the government.

Sweet! I was always amazed at how expensive Toyota's are there. Or any other import car for that matter. Great choice. The SUV should last forever.

I'm also a seller at 6 to $1US but no way in hell I'd sell for 5.10. It will be interesting to see how this plays out. I have an email in to my manager of my money exchange firm in BA so I'll see what he says on Monday.

Only in Argentina!

 

[BenVeo]

Just got back from a weekend off the grid - no internet, no newspapers, no television, and no idea. I'm just learning about this latest twist. So now we have the official rate and the official unofficial rate? The infinite regress will stop wherever the buck stops!

And just so I have this straight... what was as recently as 48 hours condemned most vociferously as illegal and unpatriotic is now negotiable? As they say, Esto es un país muy, pero muy especial.

 

[TrevorOD]

I am so confused. El expatriado has nailed it, just dont understand why they would sell dollars at $5.10, unless they are being forced by the government or there is something shady going on under the table. Unlimited access to the printing press?

 

[earlyretirement]

I am so confused. El expatriado has nailed it, just dont understand why they would sell dollars at $5.10, unless they are being forced by the government or there is something shady going on under the table. Unlimited access to the printing press?

So I just heard from my money manager there in Buenos Aires. He doesn't believe this will work. He said that the government will attempt to bring down the rate by selling tens if not hundreds of millions of dollars on the blue market and pressing the main operators (Giovinazzo, Alhec, Transcambio, etc) in the market to push down the exchange rate to what they want.

I'm really curious to see what happens this work. Only in Argentina!

 

[TrevorOD]

So I just heard from my money manager there in Buenos Aires. He doesn't believe this will work. He said that the government will attempt to bring down the rate by selling tens if not hundreds of millions of dollars on the blue market and pressing the main operators (Giovinazzo, Alhec, Transcambio, etc) in the market to push down the exchange rate to what they want.

I'm really curious to see what happens this work. Only in Argentina!

But isnt this only a short term fix? I mean, if this is their approach to bring down the black market rate, unless they are going to continue selling their $ reserves...which obviously isnt sustainable....