The dollar jumps from 31 to almost 35 in the same week

There are 29 replies in this Thread which has previously been viewed 8,493 times. The latest Post () was by JAN.

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    On Monday I got 31.60 at a local exchange place, hence I told the teller 'es muy poquitito eh!' and exchanged just what I needed to spend on the next day. Today the dollar reached 34.8 and closed at 34.40.

    Economists are predicting everything and the apocalypse. A former economist during the Menem says the pesos is in free fall and the dollar will reach 50 by January.

    This was one heck of a jump within the same week, but maybe it was a long overdue adjustment?


    Meanwhile, the FMI said they will take into account the difficulties of the current economy and reconsider the timing agreed with Argentina for financial help. Apparently Argentina asked for more promised dollar sooner than agreed, and this might have been the reason of this sudden jump in the exchange rate.


    How much do you agree with this video?

    https://youtu.be/WfGj13vREPA



    This new jump is startling, as is Carlos Rodriguez’s concern about the peso in “free fall.” I’m on a very poor connection that can’t quite download the video, so I won’t be able to watch it or opine for a few days. Meanwhile, I will read others’ commtwith great interest. Thank you for pulling all this together, serafina; this is a topic that affects all on this forum, whether earning in pesos or dollars/euros.

    I earn in dollars and typically transfer enough money each month to last me the month. I guess it would be smarter to trasnfer every week for the foresseable future to get the best deal, no? I guess the evidence yesterday suggests I should transfer everyday, but I don't fancy going to Argenper every day, especially when my local office is in Liniers. <X

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    In the last two years, where the dollar has been quite stable compared to the past, we have had the luxury to exchange once per month, as well. However, this week seems to be setting a new trend, which is just a comeback to the old Cristina's times.

    I remember than in 2014, when we arrived here, we used to exchange week-to-week or on a per-need basis as these waits usually paid off very well.


    For example, by holding onto our money for 4 days, the exchange rate increased so much in our favor that the bed frame was 'free', and the month after, using the same trick (patience), we bought 'for free' the best cat litter available in Argentina.


    Semigoodlooking, if you are banked in Argentina, I suggest you look into Transferwise as they just started operating here, as well. Of course, this is like disclosing you have a bank account abroad, so take my advice with a grain of salt.

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    Though i am not directly impacted (if ever, I am favorably impacted), I am afraid of riots and crime spikes to these sudden changes.


    We are considering as a reference our health insurance monthly plan, which was about 1720 ARS (=143 USD, blue rate of 12, official 8 ) for the two of us in 2014. Now it is over 5,600 ARS per month, which with an exchange rate of 40 is 140 USD.

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    Quote from Rice

    Both exchange houses and cuevas seem to stay up to the minute when the dollar recedes, but there is a definite lag time when it advances.

    I can totally second that.

    Yesterday morning, with the USD at 38 (and the EUR at 44), my local exchange place was offering just 40 for EUR, and later gave me 41. Outside, a long line of elder Argentinians looking to exchange their pesos for USD.


    That place did great money yesterday. But not so their clients.

    • Official Post

    From Ambito, a view on dollarisation.

    Is a convertibility in Argentina recommended today?

    • IN THE CURRENT ARGENTINE ECONOMY THERE ARE TOO MUCH PESOS, FEW DOLLARS AND A LOT OF DEBT

    The work papers that the Argentine delegation took to Washington DC to negotiate with the IMF do not give any reason, at all, to think about a scheme like the one applied in 1991 .

    Walter Graziano (*)

    WALTER GRAZIANO (*)


    Another time The one of Cavallo and the convertibility

    Another time The one of Cavallo and the convertibility

    Many took it with great disbelief. Others wondered if it could be true. The real thing is that the rumors about a new convertibility that were heard in our country added a Trump adviser talking about the issue and nothing less than launching a strong recommendation to apply, in his own words, a "currency board" ( convertibility) in Argentina.

    For some of us who helped almost three decades ago to think about the idea of convertibility from Ámbito Financiero, it was quite a surprise. It really goes beyond surprise. Even the news gives to the stupor because the work papers that the Argentine delegation took to Washington DC to negotiate with the IMF do not give any reason, at all, to think about a convertibility. The inflation rate calculated at 25% for 2019 does not give any thought to any convertibility, and the BCRA's plan to eliminate the Lebac by the end of the year partly by selling dollars from reserves, either.

    But is it advisable to apply a convertibility in Argentina today? Let's see: for a convertibility plan to have real chances of success there must be some conditions that an economy must meet. As the convertibility arises from equalizing the monetary base of a country with its currency reserves, the lower in real and relative terms the monetary base and the higher in relative terms the amount of reserves, the more chances of success a plan will have of those characteristics. Because a demonetized economy needs more local currency, so the sales of foreign currency to the Central Bank at the convertible exchange rate would be very abundant, the reserves of the monetary authority will increase, the price level will stabilize and it will help interest in local currency fall sharply and rapidly, quickly reconstituting credit, and with it, consumption, which ends up reactivating the economy in a powerful way. Up there all very nice. But is this the Argentine case? Let's see: the Argentine monetary base is approximately 1.35 trillion pesos. But there things do not end as there is "hidden" monetary base in the form of Lebac and Leliq, so the monetary liabilities of the Central Bank add 2.15 trillion pesos, a substantially higher level, and it is this that would have to take into account to calculate a possible convertible exchange rate. On the other hand, reserves, currently barely above US $ 49 billion, include a large amount of "smoke" or gross reserves that are not useful when calculating a convertible exchange rate because they are reserves with a destination or specific purpose. For example, the reserves of the argendollars are included in the reserves, amounting to around $ 16 billion of "smoke reserves". If they were included in a convertibility calculation, there would be great reason to think that the depositors of dollars of the system feel very alarmed, because they would be taking their savings to support the peso, with which the possibility of withdrawing foreign currency from the banks would be very high. Nor could the Chinese "swap" of around US $ 11 billion be taken into account, for several reasons, among them being part of a loan with an expiration date and secondly because it is more of a line of credit than from a stock of freely available reserves. If the Chinese Swap were included as part of the reserves, we would be depending on China to maintain the stability of the convertibility. And this would be very much free to leave us free .... Therefore, the net reserves of free availability would barely be US $ 22,000 million, so the quotient between the pesos that are liabilities of the Central Bank and the reserves of free availability today is a result very close to 100 pesos per dollar. At this point the reader has probably already grasped the obvious: contrary to what is advisable to apply a convertibility, today in the Argentine economy there is a large amount of pesos and a small amount of dollars: the reverse of what happened at the end of 1989 and early 1990,

    But there do not end the issues for which today it is not advisable to apply a convertibility in Argentina. Let's suppose for a moment that a country or group of countries lends us a succulent amount of dollars to lower that level from 100 pesos per dollar to the current level of 40 pesos per dollar. Well, it would be debt in dollars. Debt that would have to be paid in a few years. And what would we do when that happens? Did we get out of the convertibility by devaluing very sharply? The same applies to the issue of the current national and provincial public external debt and private debt in dollars. Only the 2019 maturities, according to the Treasury Palace itself, are US $ 29,000 million. And it is only due to the expiration of external debt at the national level, without counting the provinces or the private sector. What do we do when it comes to paying? Do we devalue with fury? Or we defaulteamos?

    Unlike 1989 and 1990, when the public debt had already been liquidated by the two hyperinflations or defaulted twice (in 1989 and 1990) when there were very few debt maturities that had to be paid, today the external debt is very large in Argentina after years of debt, debt and debt. Even if the fiscal surplus appears to pay, it would result in a serious monetary and reserve contraction, which would raise interest rates, paradoxically moving the economy away from any investor, consumer or whatever boom. The recession would be galloping.

    Applying today's convertibility to the Argentine economy would make the country financially resemble that of the convertibility of 2000 and 2001, and not that of 1991-1994. Far from having an economic boom, there would be a significant contraction with the true risk of a stampede of capital flight with the aggravating circumstance that the fixed and above all, convertible exchange rate would fly through the air.

    Today a "corralito" seems to be impossible in the Argentine economy. But imposing a convertibility would make it a certain possibility. We could continue to mention many more factors. But with this last, it seems to be more than enough. Contrary to the 1991 convertibility, today in the Argentine economy there are too many pesos, few dollars and a lot of debt to pay in the near future. The automatic adjustment of the current account seems to be far from its end. Instead of falling into despair, we can only hope that sanity prevails. Inflation at 45% -50% is a serious problem in the Argentine economy. But applying a convertibility would plunge us into much higher problems, almost one might say, from another dimension. Rather than stabilize, the priority today is not to fall into default.

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    Quote from Rice

    Can anyone explain what action, if any, was taken by the Central Bank last Tuesday? Something must have changed, as the peso has been steadily climbing for the last week -

    Because the central bank (BCRA) sold US$120m I believe Rice

    If you put this article into Chrome and right click, you should have the option to translate into English.

    http://www.ambito.com/934588-e…erro-casi-estable-a--3814