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

[Betsy Ross]

Parents are both deteriorating healthwise. That is the urgency to get back.

Agree it will take time but it just irks me to see Milei falling under the same trap as past Presidents. In the short-term he can just calm down his rhetoric. It was one of the reasons why I hated Trump. If he just kept his mouth shut and toned it down he would have a much easier time. I think Milei could follow the same advice. He is going to have to make peace with others (both here in Argentina and outside of Argentina).

The plan has to be more than just sticking it to the middle class. That isn't going to work. Sure prices had to come up but if they keep on that path it is going to be to his doom. People forget how poor Argentina is. Look at the statistics and you can see the majority of Argentineans make less than $500 USD per month. Dollarization was never going to happen. Many of us already knew that. But some people are just figuring this out.

He is doing a lot of things right.

Sorry to hear about your parents. Glad you are getting to spend time with them while you can.

People have to just trust the plan. It can't be easy fixing the country. Sometimes it feels like 2 steps forward and 1 step backwards. What he is trying to do has never been attempted in Argentina.

I told myself I would never vote for Trump and this year I found myself voting for him. Agree with you that Milei should calm down but that isn't in his nature. What keeps many people positive is just believing that the plan will work. I want to see how things are later next year. I am reserving any judgements until after next year's election.

 

[Vero]

Sorry to hear about your parents. Glad you are getting to spend time with them while you can.

People have to just trust the plan. It can't be easy fixing the country. Sometimes it feels like 2 steps forward and 1 step backwards. What he is trying to do has never been attempted in Argentina.

I told myself I would never vote for Trump and this year I found myself voting for him. Agree with you that Milei should calm down but that isn't in his nature. What keeps many people positive is just believing that the plan will work. I want to see how things are later next year. I am reserving any judgements until after next year's election.

All that I know are buying dollars each chance they can get while the peso is so high. In the end the dollar always wins here. I don't trust what government says. First they say that cepo is negative and we must get rid of it asap. Now they say they can't get rid of it and need to keep intervening in the rate. I think it crazy some think peso will do better over time than usd. That never happen here.

 

[Colin]

All that I know are buying dollars each chance they can get while the peso is so high. In the end the dollar always wins here. I don't trust what government says. First they say that cepo is negative and we must get rid of it asap. Now they say they can't get rid of it and need to keep intervening in the rate. I think it crazy some think peso will do better over time than usd. That never happen here.

Seems like this is the case with just about everyone there. People don't save their savings in pesos. Maybe the younger generations are now and trust Milei but talk to anyone older and almost everyone I know there still buy dollars whenever they can to save that way.

The problem now seems to be that inflation is so bad now that people can't save and people are having to sell their dollars to pay bills. I have heard that story over and over from local friends.

They can't blame everything on past administrations. By recent estimates prices have gone up 235% over the past 12 months. How can they blame everything on past Presidents when much of that inflation seems to be caused by policies that they have in place now. 235% is a crazy amount for prices to go up in 1 year. Can't wrap my head around that.

 

[Larry]

They can't blame everything on past administrations. By recent estimates prices have gone up 235% over the past 12 months. How can they blame everything on past Presidents when much of that inflation seems to be caused by policies that they have in place now. 235% is a crazy amount for prices to go up in 1 year. Can't wrap my head around that.

Exactly! This 235% inflation was caused by Milei. Private healthcare companies were limited before how much they could raise their fees. If you look at how much they have gone up in less than 1 year it is almost exactly at the 235% they mention in the FT article. Look at utility rates, building expenses, transportation and many other expenses and the true inflation is up significantly and the recession continues.

I posted before about this but this is nothing new what Milei and Caputo are trying. It has been tried again and failed. Do your research and you will see why it failed. They are trying to do exactly the same thing.

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 | Latin American Research Review | Cambridge Core

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 - Volume 53 Issue 4

www.cambridge.org

I will summarize if you dont' want to read the content.

"The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978" published in the Latin American Research Review discusses the economic policies implemented in Argentina during the early years of the military dictatorship, specifically focusing on the tenure of José Alfredo Martínez de Hoz as the Minister of Economy. Here's a brief outline:

1. Context:
   • Argentina was under a military dictatorship from 1976 to 1983. The regime aimed to restructure the Argentine economy, which was suffering from high inflation, economic stagnation, and political instability.
2. Martínez de Hoz Plan:
   • Economic Stabilization and Liberalization: Martínez de Hoz introduced a series of economic reforms intended to curb inflation, open up the economy to international markets, and reduce the state's role in the economy. This included financial liberalization, reducing trade barriers, and deregulating markets.
   • Financial Reform: There was an emphasis on attracting foreign capital. The financial system was reformed to encourage foreign investment and loans, leading to an influx of international finance.
   • Exchange Rate Policy: The plan implemented a pre-announced devaluation schedule known as "la tablita," which aimed to reduce inflation by setting a slower pace for the devaluation of the peso against the dollar.
3. Effects of the Plan:
   • Short-term Economic Effects: Initially, there was a reduction in inflation and an increase in foreign investment. However, this also led to an overvalued currency which hurt exports and encouraged imports, leading to trade imbalances.
   • Debt Accumulation: The openness to international finance resulted in significant borrowing from abroad, increasing Argentina's foreign debt dramatically.
   • Social and Economic Impact: The policies had mixed results. While they initially stabilized some economic indicators, they also led to deindustrialization, increased unemployment, and significant social costs due to the reduction in subsidies and public spending.
4. Criticism and Failure:
   • Critics argue that the Martínez de Hoz plan favored financial speculation over productive investment. The plan's reliance on international finance made Argentina vulnerable to global economic fluctuations.
   • By 1978, the plan started to show signs of failure as inflation rose again, and the economic situation deteriorated, leading to a crisis that would eventually contribute to the economic turmoil of the early 1980s.
5. Legacy:
   • The period is often analyzed for its long-term impact on Argentina's economic structure, particularly how it set the stage for the debt crisis of the 1980s and influenced subsequent economic policies in Argentina regarding finance, debt, and economic liberalization.

 

[BA Bound]

Exactly! This 235% inflation was caused by Milei. Private healthcare companies were limited before how much they could raise their fees. If you look at how much they have gone up in less than 1 year it is almost exactly at the 235% they mention in the FT article. Look at utility rates, building expenses, transportation and many other expenses and the true inflation is up significantly and the recession continues.

I posted before about this but this is nothing new what Milei and Caputo are trying. It has been tried again and failed. Do your research and you will see why it failed. They are trying to do exactly the same thing.

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 | Latin American Research Review | Cambridge Core

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 - Volume 53 Issue 4

www.cambridge.org

I will summarize if you dont' want to read the content.

"The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978" published in the Latin American Research Review discusses the economic policies implemented in Argentina during the early years of the military dictatorship, specifically focusing on the tenure of José Alfredo Martínez de Hoz as the Minister of Economy. Here's a brief outline:

1. Context:
   • Argentina was under a military dictatorship from 1976 to 1983. The regime aimed to restructure the Argentine economy, which was suffering from high inflation, economic stagnation, and political instability.
2. Martínez de Hoz Plan:
   • Economic Stabilization and Liberalization: Martínez de Hoz introduced a series of economic reforms intended to curb inflation, open up the economy to international markets, and reduce the state's role in the economy. This included financial liberalization, reducing trade barriers, and deregulating markets.
   • Financial Reform: There was an emphasis on attracting foreign capital. The financial system was reformed to encourage foreign investment and loans, leading to an influx of international finance.
   • Exchange Rate Policy: The plan implemented a pre-announced devaluation schedule known as "la tablita," which aimed to reduce inflation by setting a slower pace for the devaluation of the peso against the dollar.
3. Effects of the Plan:
   • Short-term Economic Effects: Initially, there was a reduction in inflation and an increase in foreign investment. However, this also led to an overvalued currency which hurt exports and encouraged imports, leading to trade imbalances.
   • Debt Accumulation: The openness to international finance resulted in significant borrowing from abroad, increasing Argentina's foreign debt dramatically.
   • Social and Economic Impact: The policies had mixed results. While they initially stabilized some economic indicators, they also led to deindustrialization, increased unemployment, and significant social costs due to the reduction in subsidies and public spending.
4. Criticism and Failure:
   • Critics argue that the Martínez de Hoz plan favored financial speculation over productive investment. The plan's reliance on international finance made Argentina vulnerable to global economic fluctuations.
   • By 1978, the plan started to show signs of failure as inflation rose again, and the economic situation deteriorated, leading to a crisis that would eventually contribute to the economic turmoil of the early 1980s.
5. Legacy:
   • The period is often analyzed for its long-term impact on Argentina's economic structure, particularly how it set the stage for the debt crisis of the 1980s and influenced subsequent economic policies in Argentina regarding finance, debt, and economic liberalization.

Interesting. Thanks for sharing. I never heard of this. The exchange rate policy sounds identical to what they are doing now. Time will tell if this works. USD inflation the past few months have been tremendous. I'm sure other expats are feeling the crunch too.

 

[Digital Nomad]

Exactly! This 235% inflation was caused by Milei. Private healthcare companies were limited before how much they could raise their fees. If you look at how much they have gone up in less than 1 year it is almost exactly at the 235% they mention in the FT article. Look at utility rates, building expenses, transportation and many other expenses and the true inflation is up significantly and the recession continues.

I posted before about this but this is nothing new what Milei and Caputo are trying. It has been tried again and failed. Do your research and you will see why it failed. They are trying to do exactly the same thing.

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 | Latin American Research Review | Cambridge Core

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 - Volume 53 Issue 4

www.cambridge.org

I will summarize if you dont' want to read the content.

"The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978" published in the Latin American Research Review discusses the economic policies implemented in Argentina during the early years of the military dictatorship, specifically focusing on the tenure of José Alfredo Martínez de Hoz as the Minister of Economy. Here's a brief outline:

1. Context:
   • Argentina was under a military dictatorship from 1976 to 1983. The regime aimed to restructure the Argentine economy, which was suffering from high inflation, economic stagnation, and political instability.
2. Martínez de Hoz Plan:
   • Economic Stabilization and Liberalization: Martínez de Hoz introduced a series of economic reforms intended to curb inflation, open up the economy to international markets, and reduce the state's role in the economy. This included financial liberalization, reducing trade barriers, and deregulating markets.
   • Financial Reform: There was an emphasis on attracting foreign capital. The financial system was reformed to encourage foreign investment and loans, leading to an influx of international finance.
   • Exchange Rate Policy: The plan implemented a pre-announced devaluation schedule known as "la tablita," which aimed to reduce inflation by setting a slower pace for the devaluation of the peso against the dollar.
3. Effects of the Plan:
   • Short-term Economic Effects: Initially, there was a reduction in inflation and an increase in foreign investment. However, this also led to an overvalued currency which hurt exports and encouraged imports, leading to trade imbalances.
   • Debt Accumulation: The openness to international finance resulted in significant borrowing from abroad, increasing Argentina's foreign debt dramatically.
   • Social and Economic Impact: The policies had mixed results. While they initially stabilized some economic indicators, they also led to deindustrialization, increased unemployment, and significant social costs due to the reduction in subsidies and public spending.
4. Criticism and Failure:
   • Critics argue that the Martínez de Hoz plan favored financial speculation over productive investment. The plan's reliance on international finance made Argentina vulnerable to global economic fluctuations.
   • By 1978, the plan started to show signs of failure as inflation rose again, and the economic situation deteriorated, leading to a crisis that would eventually contribute to the economic turmoil of the early 1980s.
5. Legacy:
   • The period is often analyzed for its long-term impact on Argentina's economic structure, particularly how it set the stage for the debt crisis of the 1980s and influenced subsequent economic policies in Argentina regarding finance, debt, and economic liberalization.

@Larry I have not agreed with most of your posts but I read that and it was an eye opener. I asked my girlfriend's father and he did agree this was tried before. He said that what happens is that it will work until it doesn't and it is a game like musical chairs. Their family withdrew all money in dollars before the corralito so it was better for them. He said the trick is to cash out before things go to sh*t.

Their family agrees with these changes but he said the same thing as some of you that this doesn't usually end up well manipulating the market. They said the peso is tremendously overvalued.

He also said until the Cepo ends, locals will keep buying and shopping outside of Argentina while the peso is overvalued. Argentine companies simply can't compete. Foreign companies won't invest here. RIGI companies that invested over $200 million get special tax breaks and different rules but smaller companies still have to deal with the Cepo.

But very very difficult situation he said to end the Cepo now.

 

[Larry]

This is a good post. It is like he says investments have imploded. Good example of a person that has a scratch on his arm and you decide to cut it off.

https://twitter.com/x/status/1845194826729357623

 

[Vince]

Exactly! This 235% inflation was caused by Milei. Private healthcare companies were limited before how much they could raise their fees. If you look at how much they have gone up in less than 1 year it is almost exactly at the 235% they mention in the FT article. Look at utility rates, building expenses, transportation and many other expenses and the true inflation is up significantly and the recession continues.

I posted before about this but this is nothing new what Milei and Caputo are trying. It has been tried again and failed. Do your research and you will see why it failed. They are trying to do exactly the same thing.

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 | Latin American Research Review | Cambridge Core

The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978 - Volume 53 Issue 4

www.cambridge.org

I will summarize if you dont' want to read the content.

"The Return of International Finance and the Martínez de Hoz Plan in Argentina, 1976–1978" published in the Latin American Research Review discusses the economic policies implemented in Argentina during the early years of the military dictatorship, specifically focusing on the tenure of José Alfredo Martínez de Hoz as the Minister of Economy. Here's a brief outline:

1. Context:
   • Argentina was under a military dictatorship from 1976 to 1983. The regime aimed to restructure the Argentine economy, which was suffering from high inflation, economic stagnation, and political instability.
2. Martínez de Hoz Plan:
   • Economic Stabilization and Liberalization: Martínez de Hoz introduced a series of economic reforms intended to curb inflation, open up the economy to international markets, and reduce the state's role in the economy. This included financial liberalization, reducing trade barriers, and deregulating markets.
   • Financial Reform: There was an emphasis on attracting foreign capital. The financial system was reformed to encourage foreign investment and loans, leading to an influx of international finance.
   • Exchange Rate Policy: The plan implemented a pre-announced devaluation schedule known as "la tablita," which aimed to reduce inflation by setting a slower pace for the devaluation of the peso against the dollar.
3. Effects of the Plan:
   • Short-term Economic Effects: Initially, there was a reduction in inflation and an increase in foreign investment. However, this also led to an overvalued currency which hurt exports and encouraged imports, leading to trade imbalances.
   • Debt Accumulation: The openness to international finance resulted in significant borrowing from abroad, increasing Argentina's foreign debt dramatically.
   • Social and Economic Impact: The policies had mixed results. While they initially stabilized some economic indicators, they also led to deindustrialization, increased unemployment, and significant social costs due to the reduction in subsidies and public spending.
4. Criticism and Failure:
   • Critics argue that the Martínez de Hoz plan favored financial speculation over productive investment. The plan's reliance on international finance made Argentina vulnerable to global economic fluctuations.
   • By 1978, the plan started to show signs of failure as inflation rose again, and the economic situation deteriorated, leading to a crisis that would eventually contribute to the economic turmoil of the early 1980s.
5. Legacy:
   • The period is often analyzed for its long-term impact on Argentina's economic structure, particularly how it set the stage for the debt crisis of the 1980s and influenced subsequent economic policies in Argentina regarding finance, debt, and economic liberalization.

Parts of this plan have been tried but there hasn't been anyone like Milei that is cleaning up corruption and reducing state spending so much. Like I said, a lot of what he is doing is great and necessary.

This is a good post. It is like he says investments have imploded. Good example of a person that has a scratch on his arm and you decide to cut it off.

View attachment 7747

https://twitter.com/x/status/1845194826729357623

If he used to work at Golden Sachs you have to wonder if he has a vested interest in bashing Argentina. Many of these bankers make $$$ when a country goes into the toilet. He makes some good points but many people like him have never even been in Argentina. Many economists don't understand Argentina or ever lived here. You have to understand local dynamics.

 

[Wally]

Parts of this plan have been tried but there hasn't been anyone like Milei that is cleaning up corruption and reducing state spending so much. Like I said, a lot of what he is doing is great and necessary.


If he used to work at Golden Sacks you have to wonder if he has a vested interest in bashing Argentina. Many of these bankers make $$$ when a country goes into the toilet. He makes some good points but many people like him have never even been in Argentina. Many economists don't understand Argentina or ever lived here. You have to understand local dynamics.

You are right he is probably on the wrong side of the trade. The thing about Argentina is that it is so up and down you can usually wait a few year and whatever side you are on will eventually be correct.

Do agree that we will see true inflation rate once they end cepo. We will know more next year. Until then everyone is on the roller coaster ride.

 

[Finance Prof]

Parts of this plan have been tried but there hasn't been anyone like Milei that is cleaning up corruption and reducing state spending so much. Like I said, a lot of what he is doing is great and necessary.


If he used to work at Golden Sacks you have to wonder if he has a vested interest in bashing Argentina. Many of these bankers make $$$ when a country goes into the toilet. He makes some good points but many people like him have never even been in Argentina. Many economists don't understand Argentina or ever lived here. You have to understand local dynamics.

Yes, Robin formally worked at Goldman. Goldman Sachs closed their recommendation to go long on Argentina's USD notes in April. Some acquaintances that I know at Goldman told me that they recently started short positions so this probably explains this guy harping on Argentina. Not saying a devaluation won't eventually happen next year or maybe the end of this year. But you can see this article below and read between the lines.

Goldman, Stone Harbor wind back Argentina bets after bond rally

Investors who rode an eye-popping rally in Argentina’s sovereign debt this year are starting to pull back.

www.batimes.com.ar

 

[Bill]

Yes, Robin formally worked at Goldman. Goldman Sachs closed their recommendation to go long on Argentina's USD notes in April. Some acquaintances that I know at Goldman told me that they recently started short positions so this probably explains this guy harping on Argentina. Not saying a devaluation won't eventually happen next year or maybe the end of this year. But you can see this article below and read between the lines.

Goldman, Stone Harbor wind back Argentina bets after bond rally

Investors who rode an eye-popping rally in Argentina’s sovereign debt this year are starting to pull back.

www.batimes.com.ar

That is some good investigative work. I never heard of this guy but all of a sudden he keeps posting about Argentina.

Here is another post today. He probably has friends that are trying to make money but are any of his points correct? Everyone is saying the same thing that the peso is overvalued except some people on the other side trying to make money. One response that was makes sense was this post.



When we look at the high inflation rates, government interventions, the wide spread between official and parallel market exchange rates, and significant economic policies like devaluations, there's a compelling case that the Argentine peso is overvalued according to its purchasing power parity. This situation not only affects local purchasing power but also distorts international trade and investment flows, making the argument for an overvalued peso not just an economic theory but a palpable economic reality for many in Argentina.

https://twitter.com/x/status/1845497596749529354

 

[Vero]

I just saw more posts about Argentina. Now the former US Treasury/IMF rep is posting about official devaluation too. I wonder if devaluation will be condition to give Argentina more money.

https://twitter.com/x/status/1845498850242330746

 

[TonyTigre]

A few months ago, speculations, devaluation fears, probably caused by intentional lies posted by those who would benefit, caused the rate to quickly jump to ~1500 from ~1000 . I think it was prudent for Milei's administration to fight that market manipulation even if it meant doing some manipulation (intervention) of their own. They intervened to stop manipulation. I don't see any reason for them to have to continue to intervene after it goes back below 1300. So if it continued to go lower as it did, I doubt it's due to active intervention by the government. Remember that the rate came down after hitting new highs in January without government intervention as well. The reasons for the recent drops might not be the same, but the point is that it doesn't have to be due to active intervention by the government.

I do agree that no one knows what the true and fair exchange rate should be, myself included. On the one hand people can argue that cumulative manipulation means the peso is overvalued, but one can also argue that the pesos was pushed down too low due to fear of hyperinflation and therefore if such risk is gone, the peso can rise back to a fair value that is perhaps higher than some people would like.

 

[Vero]

A few months ago, speculations, devaluation fears, probably caused by intentional lies posted by those who would benefit, caused the rate to quickly jump to ~1500 from ~1000 . I think it was prudent for Milei's administration to fight that market manipulation even if it meant doing some manipulation (intervention) of their own. They intervened to stop manipulation. I don't see any reason for them to have to continue to intervene after it goes back below 1300. So if it continued to go lower as it did, I doubt it's due to active intervention by the government. Remember that the rate came down after hitting new highs in January without government intervention as well. The reasons for the recent drops might not be the same, but the point is that it doesn't have to be due to active intervention by the government.

I do agree that no one knows what the true and fair exchange rate should be, myself included. On the one hand people can argue that cumulative manipulation means the peso is overvalued, but one can also argue that the pesos was pushed down too low due to fear of hyperinflation and therefore if such risk is gone, the peso can rise back to a fair value that is perhaps higher than some people would like.

Argentina is becoming too expensive in dollars. I worry that it will get too expensive and we won't be competitive.

 

[Betsy Ross]

A few months ago, speculations, devaluation fears, probably caused by intentional lies posted by those who would benefit, caused the rate to quickly jump to ~1500 from ~1000 . I think it was prudent for Milei's administration to fight that market manipulation even if it meant doing some manipulation (intervention) of their own. They intervened to stop manipulation. I don't see any reason for them to have to continue to intervene after it goes back below 1300. So if it continued to go lower as it did, I doubt it's due to active intervention by the government. Remember that the rate came down after hitting new highs in January without government intervention as well. The reasons for the recent drops might not be the same, but the point is that it doesn't have to be due to active intervention by the government.

I do agree that no one knows what the true and fair exchange rate should be, myself included. On the one hand people can argue that cumulative manipulation means the peso is overvalued, but one can also argue that the pesos was pushed down too low due to fear of hyperinflation and therefore if such risk is gone, the peso can rise back to a fair value that is perhaps higher than some people would like.

I'm not sure I agree with any intervention at all. It could have unintended consequences. Agree they don't need to and can't afford to keep with intervention. I guess we will find out what fair value of the peso is once it ends. Argentina can't keep it up forever. I have seen several cycles of boom and bust but we have never had someone like Milei in place. This time feels different but I'm still worried.

I don't know what the fair value is but Argentina is very expensive for the low salaries that locals have. No one can say what the peso will do.

 

[Vince]

People have to understand that these big investment banks don't care about Argentina. They don't care about Milei or even the people in Argentina. All they care about is making money. They will bet for Argentina when it suits them and they will bet against it too. Argentina always has up and down cycles. Like I always tell people that ask me, we will know by the end of next year after the election how successful this will be.

I don't know what the fair value is but Argentina is very expensive for the low salaries that locals have. No one can say what the peso will do.

True. You can't have the prices of Europe or States for many things with the salaries of Africa. Only way you can justify Argentina being expensive in dollars is if the salaries are higher. It is difficult for companies to invest in Argentina when the President doesn't want to invest in Argentina. It is difficult to expect private companies to keep giving raises when the State refuses to do so.

 

[Uncle Wong]

A few months ago, speculations, devaluation fears, probably caused by intentional lies posted by those who would benefit, caused the rate to quickly jump to ~1500 from ~1000 . I think it was prudent for Milei's administration to fight that market manipulation even if it meant doing some manipulation (intervention) of their own. They intervened to stop manipulation. I don't see any reason for them to have to continue to intervene after it goes back below 1300. So if it continued to go lower as it did, I doubt it's due to active intervention by the government. Remember that the rate came down after hitting new highs in January without government intervention as well. The reasons for the recent drops might not be the same, but the point is that it doesn't have to be due to active intervention by the government.

I do agree that no one knows what the true and fair exchange rate should be, myself included. On the one hand people can argue that cumulative manipulation means the peso is overvalued, but one can also argue that the pesos was pushed down too low due to fear of hyperinflation and therefore if such risk is gone, the peso can rise back to a fair value that is perhaps higher than some people would like.

This sounds logical. @TonyTigre the problem is do you know how much intervention there is? Some people that I have spoken to there tell me the government can't afford to be intervening. I don't know enough about all of this. It sounds complicated but I read what @Larry posted and it doesn't sound like anything new. I thought these were Milei and Caputos ideas but it looks like this has been tried before with bad outcome.

People have to understand that these big investment banks don't care about Argentina. They don't care about Milei or even the people in Argentina. All they care about is making money. They will bet for Argentina when it suits them and they will bet against it too. Argentina always has up and down cycles. Like I always tell people that ask me, we will know by the end of next year after the election how successful this will be.

This is sad but true. All of these people don't sound like they care about Argentina. Even the IMF seems like they prefer when the country is in misery. It doesn't make sense to me that they would loan Argentina money when conditions are so bad but don't want to now that they see things improving. That seems counter-intuitive to me.

 

[Jenn]

A few months ago, speculations, devaluation fears, probably caused by intentional lies posted by those who would benefit, caused the rate to quickly jump to ~1500 from ~1000 . I think it was prudent for Milei's administration to fight that market manipulation even if it meant doing some manipulation (intervention) of their own. They intervened to stop manipulation. I don't see any reason for them to have to continue to intervene after it goes back below 1300. So if it continued to go lower as it did, I doubt it's due to active intervention by the government. Remember that the rate came down after hitting new highs in January without government intervention as well. The reasons for the recent drops might not be the same, but the point is that it doesn't have to be due to active intervention by the government.

I do agree that no one knows what the true and fair exchange rate should be, myself included. On the one hand people can argue that cumulative manipulation means the peso is overvalued, but one can also argue that the pesos was pushed down too low due to fear of hyperinflation and therefore if such risk is gone, the peso can rise back to a fair value that is perhaps higher than some people would like.

The question is how does anyone know the right time to stop messing around with the peso? I don't understand the argument with knowing what it is fairly valued at if someone is intervening. Seems like it's all speculation which I guess is what this all boils down to.

Is there any case study or history where messing around with your own currency works out in the long run?

 

[import export]

A few months ago, speculations, devaluation fears, probably caused by intentional lies posted by those who would benefit, caused the rate to quickly jump to ~1500 from ~1000 . I think it was prudent for Milei's administration to fight that market manipulation even if it meant doing some manipulation (intervention) of their own. They intervened to stop manipulation. I don't see any reason for them to have to continue to intervene after it goes back below 1300. So if it continued to go lower as it did, I doubt it's due to active intervention by the government. Remember that the rate came down after hitting new highs in January without government intervention as well. The reasons for the recent drops might not be the same, but the point is that it doesn't have to be due to active intervention by the government.

I do agree that no one knows what the true and fair exchange rate should be, myself included. On the one hand people can argue that cumulative manipulation means the peso is overvalued, but one can also argue that the pesos was pushed down too low due to fear of hyperinflation and therefore if such risk is gone, the peso can rise back to a fair value that is perhaps higher than some people would like.

I don't buy your argument @TonyTigre that Milei had to fight manipulation with more manipulation. Listen to yourself. This is why countries just need to allow their currency to float freely without manipulating it so you can see what the true value is. Otherwise, you are just masking true problems and risk kicking the can down the road and delaying the recovery. He could have just used the excuse that he inherited problems from other Presidents but with the action he is taking now all of this can be blamed on him.

I have been doing business in Argentina for quite some time now. I have also followed Milei for several years watching him get more popular. His entire career he has argued that the Cepo was a negative. That it causes problems with the exchange rate, production problems, inflation and poverty. Now he is doing the exact opposite of what he argued for before.

These lower inflation numbers are just a manipulation of things. Take a look at what Milei's former partner and former friend says about Milei. This guy is also an economist. He makes some good points.

Diego Giacomini: “Milei sabe que si abre el cepo, le salta el dólar, se le acelera la inflación y se le acaba la mentira”

El economista resaltó los errores de la gestión económica actual, alertó por una desinflación baja y lenta, la recesión y una disociación entre las expectativas de mercado y el pronóstico para la economía real. “Después de esto, la proscripción del liberalismo será más larga y pesada”, dice.

www-ambito-com.translate.goog

 

[Uncle Wong]

I don't buy your argument @TonyTigre that Milei had to fight manipulation with more manipulation. Listen to yourself. This is why countries just need to allow their currency to float freely without manipulating it so you can see what the true value is. Otherwise, you are just masking true problems and risk kicking the can down the road and delaying the recovery. He could have just used the excuse that he inherited problems from other Presidents but with the action he is taking now all of this can be blamed on him.

I don't know too much at all about exchange rates or currency but it doesn't sound like any kind of manipulation is good over the long run.

The question is how does anyone know the right time to stop messing around with the peso? I don't understand the argument with knowing what it is fairly valued at if someone is intervening. Seems like it's all speculation which I guess is what this all boils down to.

Is there any case study or history where messing around with your own currency works out in the long run?

I asked AI and they all said there isn't any long-term success. It said there are cases where in the short run it might be considered successful usually over the long run it wasn't.