Banking What is going on with the Blue dollar? Why is it going down?

[Digital Nomad]

According to this highly respected economist, who is one of the most listened to by Milei, he's saying that although it seems like the Central Bank (BCRA) is trying to maintain a stable exchange rate by selling reserves, there is actually no formal commitment to do so. Therefore, the 2% monthly adjustment they have been making could change at any time.

Por qué sube el dólar blue y qué puede pasar, según Juan Carlos de Pablo

El economista, uno de los más escuchados del mercado, advirtió que el Gobierno no hizo una "promesa formal" de mantener un tipo de cambio.

www.cronista.com

Seems like they aren't going to tell you what is really going on even if they knew which they might not. As an expat with dollars this is great for me. Makes everything more affordable. I've only been here a few months but things here sure yo yo around quite a bit.

 

[lovelyM]

Despite the significant jump in the free dollar's value, Milei aimed to paint an optimistic picture of the economic situation after the approval of the Basic Law and the economic announcements made on Friday to tackle the next phase. He pointed out a clear signal: there won't be a currency devaluation, and "nothing is scary." Today at the Casa Rosada, in a meeting with the entire cabinet, he said this won't interfere at all with his economic plan.

La explicación de Milei al gabinete por la disparada del dólar blue y el riesgo país

El presidente se reunió con todos sus ministros y evaluó el impacto en el mercado de las medidas económicas. Las proyecciones a futuro y una ratificación plena del plan encarado por Caputo.

www.cronista.com

 

[Bob]

Despite the significant jump in the free dollar's value, Milei aimed to paint an optimistic picture of the economic situation after the approval of the Basic Law and the economic announcements made on Friday to tackle the next phase. He pointed out a clear signal: there won't be a currency devaluation, and "nothing is scary." Today at the Casa Rosada, in a meeting with the entire cabinet, he said this won't interfere at all with his economic plan.

La explicación de Milei al gabinete por la disparada del dólar blue y el riesgo país

El presidente se reunió con todos sus ministros y evaluó el impacto en el mercado de las medidas económicas. Las proyecciones a futuro y una ratificación plena del plan encarado por Caputo.

www.cronista.com

I know it feels a little guilty to hope the blue dollar collapses do you expats also hope that the blue dollar keeps getting worse so cost of living stays low? Things are much cheaper at 1,400 vs. 1,000 pesos. I got a little worried when it was so low. Who else is secretly hoping it continues to crash? How bad/good do people think it will get?

 

[Digital Nomad]

I know it feels a little guilty to hope the blue dollar collapses do you expats also hope that the blue dollar keeps getting worse so cost of living stays low? Things are much cheaper at 1,400 vs. 1,000 pesos. I got a little worried when it was so low. Who else is secretly hoping it continues to crash? How bad/good do people think it will get?

Yes. While I do hope things improve here for the locals I also hope cost of living stays low for me. I haven't lived here long enough to feel guilty. I hope the blue dollar goes higher. I heard Caputo and Milei saying they weren't going to devalue again so if not things shouldn't get so expensive again should they?

 

[Johnny]

I know it feels a little guilty to hope the blue dollar collapses do you expats also hope that the blue dollar keeps getting worse so cost of living stays low? Things are much cheaper at 1,400 vs. 1,000 pesos. I got a little worried when it was so low. Who else is secretly hoping it continues to crash? How bad/good do people think it will get?

I know the feeling. I just bought a new apartment that they are building now. I already paid for the apartment but the better the blue dollar is for me the more money I will make because my income is in dollars and my expenses are all in pesos so I do hope that the blue dollar keeps going up. Makes life much cheaper for me. I do hope situation improves there for everyone in Argentina but unless I'm mistaken, don't most expats want a strong blue dollar?

I'm not sure I would believe any expats that live there that wouldn't prefer a stronger blue dollar. I was told that Argentina is not going to dollarize anytime soon which sounds like it will be better for expats.

 

[Finance Prof]

I know it feels a little guilty to hope the blue dollar collapses do you expats also hope that the blue dollar keeps getting worse so cost of living stays low? Things are much cheaper at 1,400 vs. 1,000 pesos. I got a little worried when it was so low. Who else is secretly hoping it continues to crash? How bad/good do people think it will get?

Some might not admit it but most expats want a very strong blue dollar. Despite what Caputo and Milei are saying the market is anticipating moves. That 2% fixed peg won't last despite promises of holding firm. They will probably have to move up the schedule of the crawling peg higher.

 

[Betsy Ross]

I know it feels a little guilty to hope the blue dollar collapses do you expats also hope that the blue dollar keeps getting worse so cost of living stays low? Things are much cheaper at 1,400 vs. 1,000 pesos. I got a little worried when it was so low. Who else is secretly hoping it continues to crash? How bad/good do people think it will get?

Most people want something realistic. They want the best of both worlds. They want a very cheap Argentina at the same time they want the economy to improve drastically. Typically the two don't go hand in hand. The times when the economy have been terrific, it's been very expensive here. Most expats are on fixed income so it's better for them when it is very affordable.

Even with a horrible economy the quality of life here is good and relatively safe.

 

[Larry]

Most people want something realistic. They want the best of both worlds. They want a very cheap Argentina at the same time they want the economy to improve drastically. Typically the two don't go hand in hand. The times when the economy have been terrific, it's been very expensive here. Most expats are on fixed income so it's better for them when it is very affordable.

Even with a horrible economy the quality of life here is good and relatively safe.

This is true @Betsy Ross. We all do want the best of both worlds. I for one am enjoying a strong blue dollar. The markets don't believe the government. I will enjoy the exchange rate trap until the government is forced to devalue once again and inflation heads back up.

Argentina’s bonds and shares are collapsing. Why doesn’t the market believe the government? - Buenos Aires Herald

Caputo and Bausili refused to say when Argentina might exit the cepo, sparking uncertainty

buenosairesherald.com

 

[ranchero]

Finally, Caputo acknowledged the devaluation, but it seems he has a plan. His idea is simple: reduce inflation to very low levels and, potentially, unify the exchange rate from there. Will he be able to do it?

Dólar y el plan secreto de Luis Caputo: aguantar la devaluación, inducir la depresión económica, y después...

La idea transmitida a gobernadores es básica: bajar la inflación a niveles muy bajos, desde ahí, unificar el tipo de cambio, sin cepo. Llegaría la devaluación.

www.ambito.com

 

[Wally]

Finally, Caputo acknowledged the devaluation, but it seems he has a plan. His idea is simple: reduce inflation to very low levels and, potentially, unify the exchange rate from there. Will he be able to do it?

Dólar y el plan secreto de Luis Caputo: aguantar la devaluación, inducir la depresión económica, y después...

La idea transmitida a gobernadores es básica: bajar la inflación a niveles muy bajos, desde ahí, unificar el tipo de cambio, sin cepo. Llegaría la devaluación.

www.ambito.com

These guys have a hope and a prayer but it doesn't exactly sound like a good plan to me. The only days there is stability is when they are going in and manipulating the market. It should float freely. This is what CFK also did.

 

[Blockchain]

I read here that the Finance Minister is saying the Peso will end the year at 1,061 for the official rate. Not sure where the blue rate will be. Do any of you expats here load up and buy a lot of pesos when it is over 1,400 to $1 uSD? And then try to see if the rate goes down? Or is this stupid?

 

[FuturoBA]

Most people want something realistic. They want the best of both worlds. They want a very cheap Argentina at the same time they want the economy to improve drastically. Typically the two don't go hand in hand. The times when the economy have been terrific, it's been very expensive here. Most expats are on fixed income so it's better for them when it is very affordable.

Even with a horrible economy the quality of life here is good and relatively safe.

Human nature is to be selfish first, generous second. Since no one has control nor can predict what will happen, it's best to have contingency plans on what one has control over whether that's scaling back on trips, eating out, or finding additional income.

 

[Blockchain]

Human nature is to be selfish first, generous second. Since no one has control nor can predict what will happen, it's best to have contingency plans on what one has control over whether that's scaling back on trips, eating out, or finding additional income.

Very true. It seems like it would be very stressful to live here on a limited budget as things change so quickly here.

 

[Betsy Ross]

I read here that the Finance Minister is saying the Peso will end the year at 1,061 for the official rate. Not sure where the blue rate will be. Do any of you expats here load up and buy a lot of pesos when it is over 1,400 to $1 uSD? And then try to see if the rate goes down? Or is this stupid?

Most people that have been here for the long haul don't buy many pesos. I have purchased enough pesos when it's high to pay for a month or two of expenses but don't take savings and buy more than a month or so worth of expenses. Best not to bet against the US dollar here.

 

[VINO]

Human nature is to be selfish first, generous second. Since no one has control nor can predict what will happen, it's best to have contingency plans on what one has control over whether that's scaling back on trips, eating out, or finding additional income.

True. I have many friends here in the States and people forget there has been a lot of inflation especially at the grocery store here in the States. Many friends that are retired have cut back on eating out at restaurants and some have gotten part time jobs as the price of everything has also gone up here.

Agree with Betsy about buying pesos. When it spikes up I will buy enough to cover what I might need. Previously it was more volatile and it has been fairly stable the past few months. But it hurt when it was only 1,000. I had my friend buy me some pesos today to lock in the great rate. But I don't know anyone that buys pesos when it's high and trades it thinking it will get very strong. Usually when it spikes like this there is some reason. And those reasons aren't typically positive.

 

[Vince]

I read here that the Finance Minister is saying the Peso will end the year at 1,061 for the official rate. Not sure where the blue rate will be. Do any of you expats here load up and buy a lot of pesos when it is over 1,400 to $1 uSD? And then try to see if the rate goes down? Or is this stupid?

Many buy enough pesos to cover that month's bills or sometimes more. I don't get into trading pesos. All my savings are in dollars. When it jumps up like this unexpectedly I will buy some. It could go higher but I'm comfortable at the better exchange rates. Sounds like many of us have the same strategy.

No one knows how high it will go and a bunch depend on factors out of our control like the Central Bank and how much they try to control it. People say the peso is still overvalued. I can't imagine it would skyrocket much further up. My banker friends have been saying a while now that the rate should have been closer to 1,500 to $1 USD and that's what we're seeing today.

I may be some more pesos this week to cover next months bills.

 

[legend]

Well... according to Caputo's plan, the idea is to bring the dollar to $1061 by the end of 2024. We'll see if he succeeds, because I really don't know if this abrupt jump in the exchange rate these days was expected.

The government aims to finish 2024 with AR$1,061 exchange rate, 130% inflation - Buenos Aires Herald

A preliminary budget report filed by the Economy Ministry laid out the government’s expectations for the year

buenosairesherald.com

 

[Digital Nomad]

Most people that have been here for the long haul don't buy many pesos. I have purchased enough pesos when it's high to pay for a month or two of expenses but don't take savings and buy more than a month or so worth of expenses. Best not to bet against the US dollar here.

This is a good idea to cover a month's worth of bills when it is this high. It's 1,410 today near my apartment. Going back up a little today.

 

[Ron]

This is a good time to exchange some dollars because if Caputo's plan works, we could be losing money.

 

[Wally]

This is a good time to exchange some dollars because if Caputo's plan works, we could be losing money.

That is a big IF but I agree at 1,400 it seems like a windfall compared to the puny rates just a few months ago.