When the oppressive heat in Buenos Aires becomes just too much to bear at the height of the austral summer, those who can afford it prefer to jet off to cooler climes to see in the New Year.
But some may have been forced to rethink their holiday plans after the Argentine government moved to stem an alarming decline of foreign currency reserves by bumping up the price at which it sells dollars to Argentines travelling abroad, in what amounts to a stealth devaluation. Continue reading »
Dollars in Latin America may be the currency that many people think in, but only Ecuador and Panama have them as legal tender. That said, in some countries, some items are priced, and can be paid for, in greenbacks and you can even draw them out of ATMs.
Dollars are an especially sensitive subject in Argentina, where foreign exchange controls are rigid and the black market rate has soared to twice the official rate.
So here’s one provocative idea: ditch the peso in Argentine entirely. Dollarise. Continue reading »
It’s been a tough 24 hours for the people who run the Argentine economy.
A day after President Cristina Fernández de Kirchner promised that there would be no devaluation of the peso under her administration, everything seemed to go sideways.
First, the black market dollar – known as the “blue” dollar – broke through the Messi barrier. Continue reading »
Watching Argentina’s unofficial exchange rate is suddenly like being at an auction: on Wednesday it has risen breathlessly, hitting 8.75 pesos per dollar. Yesterday it was 8.27 pesos, Monday it was 8.08. And breaching the 8-peso barrier was a milestone in itself. What’s going on? Continue reading »
Argentina has a problem: people save too much.
That, at least, is how the national stock market regulatory body sees things. Argentina is awash with pesos – some 380bn in bank deposits, for example – yet only 8 per cent of even the most educated social classes has ever invested in a market instrument. Continue reading »
Wiping 20 per cent off the value of the Argentine currency this year “isn’t off the wall”. So says Guillermo Moreno, the internal trade secretary and one of the tough guys in the government of Cristina Fernández.
What is this – rare honesty from an administration that denies the country has a problem with inflation? Continue reading »
Argentines continue sprinting away from their peso as if it were slathered with avian flu virus. After hitting a record high yesterday, the black market (or “blue”) dollar in Argentina hit another high on Thursday, of 7.54 pesos to the dollar, the local daily La Nación reported. Continue reading »
Here’s a timely reminder that Argentina’s problems go far beyond its legal wrangling with its “holdout” creditors.
Wednesday saw another day of intense trading in the unofficial dollar market as Argentines fled from the peso to the US dollar. The black market, or “blue” rate, hit a record high of 7.52 pesos per dollar. That is 52 per cent more than the government’s official rate of around 4.96 pesos per dollar. Continue reading »
For Felipe, an Argentine freelancer who works in the media, opening a bank account recently meant catching the ferry across the River Plate to Uruguay.
“I’m losing 40 per cent of my salary just because of the exchange rate,” he says. “That could pay a month’s quota at my daughter’s school or a small mortgage.” Continue reading »
It was nice while it lasted.
Like a harried engineer using his fingers to patch a leaky dyke, on Thursday the Argentine government announced yet another currency restriction aimed at stopping the bleed of foreign currency from its central bank.
This time the target was overseas credit card purchases, which up until now were not limited. Continue reading »
The Argentine government has come up with another rule designed to clamp down on dollar holdings: mutual funds are now being obliged to value their foreign investments at the official exchange rate.
Is this another example of Argentina shooting itself in the foot? Continue reading »
In an interview with Radio Continental on Friday, Argentine central bank president Mercedes Marcó del Pont confirmed news reports that the government was considering means to stop guarantees in the country’s futures markets from being written in dollars or other foreign currencies. Continue reading »
Argentina’s clampdown on foreign currency purchases has claimed another victim: peso-denominated bonds. Argentina’s inflation-linked peso bonds have lost an average of 15 per cent so far this year, reports Bloomberg, quoting data compiled by Barclays.
On the surface, the bonds certainly look attractive. The inflation-linked Argentine bonds due in 2033 yield 14.3 per cent plus the official annual inflation rate, according to Bloomberg. But that plus is the problem. The annual inflation rate as reported by INDEC, the national statistics agency, sits at 9.9 per cent. But many private economists say that INDEC has woefully underreported inflation since the Argentine government intervened in INDEC in 2007, and that the current annual rate is closer to 25 per cent. Continue reading »
The Argentine government formally announced on Thursday that its citizens will no longer be able to convert their savings from pesos to dollars, something many Argentines do to hedge against inflation and devaluation.
Driving the point home in an interview published Friday in the pro-government newspaper Pagina/12, Argentine central bank president Mercedes Marcó del Pont noted that the exchange restrictions also applied to real estate buyers purchasing dollar-denominated properties. “People doing these transactions will have to make the payments in pesos,” she said. Continue reading »
Argentines have lately been dusting down a tried and tested shopping experience: “deme dos” – or “I’ll take two of those”.
Over the years, whenever things are perceived to be expensive, or hard to get at home, smart Argentines who can buy goods abroad have tried to do so – and while they’re at it, they like to stock up. I’ll take two, thank you.
They’re at it again. Only this time, Argentines are using their credit cards aboard to get around the government’s restrictions on dollar buying. Continue reading »