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Bloody crazy situation....
A friend had an interview for a job this week .
Salary quoted in dollars converted at the rate of exchange of th last day of the month.
He asked for it to be paid into his European bank account in Dollars Or Euros....
They are negotiating .....
I am debating with my husband whether we should be proactive and buy a new aircon unit, since our old one goes from zero to Greenland and the fan is not adjustable (it is the one in the bedroom, so it blows on the mattress directly).
I would also like a silver refrigerator for the kitchen. The issue is that selling old stuff has become harder. There isn't much money to spare nowadays.
I am debating with my husband whether we should be proactive and buy a new aircon unit, since our old one goes from zero to Greenland and the fan is not adjustable (it is the one in the bedroom, so it blows on the mattress directly).
I would also like a silver refrigerator for the kitchen. The issue is that selling old stuff has become harder. There isn't much money to spare nowadays.
You basically have to sell to get rid of items now, which means selling for a low price. We just sold two kids bikes well below what they are worth just because I am tired of them lying around. If you drop the price 1000 or 2000 pesos below what the general price for your model is on Mercardolibre, you just find buyers quick. Facebook Marketplace is better for shifting things quickly, imo.
You basically have to sell to get rid of items now, which means selling for a low price. We just sold two kids bikes well below what they are worth just because I am tired of them lying around. If you drop the price 1000 or 2000 pesos below what the general price for your model is on Mercardolibre, you just find buyers quick. Facebook Marketplace is better for shifting things quickly, imo.
My husband is the one in charge of selling and he has a spreadsheet to keep track of all the ads he publishes and where. He posts on several FB selling groups (about 20), on FB Marketplace, ML etc.
Some things, like language learning/teaching books, are obviously slow right now. But I was surprised to see that even basic stuff is not going if it costs more than 4,000 ARS, which is worth less and less as the days go by. Is the economic advantage of a strong dollar worth underselling used stuff? Probably!
When we moved in, the place was furnished and we had to sell most of the stuff that was here. We got rid of half over the weekend doing a "Vendo todo por mudanza" ad on several FB groups. We raised a good amount of money, I think we got more than 500 USD back then! Right now, 4,000 ARS or 28 USD is already too much for an ordinary item. (Unless it is a collectible or electronics).
Another example: our Dyson vacuum cleaner apparently died a couple of months ago. No service has spares for Dyson, so we bought a new Black & Decker on ML for 108 USD. We tried to sell the dead-Dyson for spares, but obviously nobody was interested.
My husband had a lucky intuition... what if it was the new Argentinian plug we had installed on the Dyson? He was right!
Our Dyson was alive and well, and the plug screw was loose.
So we had two vacuum cleaners... and the 1-month-old Black & Decker, now costing 14,000 ARS new, got sold for 9,000 ARS. We were requesting 11,000 and we rejected a couple of offers for 10,000, but the more we waited, the less we would be making. So after sitting two weeks in the living room, we accepted the first new offer (9,000 ARS).
All in all, it cost us about 30 USD not thinking about the plug immediately. I was the one being picky on the price on the B&D, but for a combination of weird reasons (the exchange rate going up, the price on ML for the new item being slightly reduced by the reseller) the new model was costing even less than we bought it, so we had to sell it for even less.
Trying to navigate the Argentinian market is like trying to walk on an inflated mattress... very wobbly!
I just get exhausted trying to decide which day I pay the credit card bills...
I just get exhausted trying to decide which day I pay the credit card bills...
When we moved here, my husband's grandfather literally fathered him into accounting the Argentinian way. We adopted a huge spreadsheet where my husband keeps the family accounting: money in, money out, categories of spending, exchange rates, methods of payment. It is like a second job to me, but he assured me that it's worth the pain.
To be honest, over the years I have heard commentaries on 'savings' thanks to the dollar exchange basically every other week. During the Macri era, it was useful to make comparison of the costs in USD over the years.
Last week I had business downtown: however, October 1st marked new fees for many services. Hence, my cost estimate with my clients was based on the old fee, and I was quite pissed that the new fee with the provider was basically eating out all my margin. Needless to say, by Friday the exchange rate had changed so much that my margin was back in place!
I think we will start to see random price updates without even faking it is a quarterly or monthly update. With the cepo and the controlled price, the government is trying to keep a lid on the economy, but the soup is boiling hot!
Since Adri is an accountant, she keeps spreadsheets for everything. Her work life is dominated by spreadsheets so she has all our accounting down to the last penny and knows all the ins and outs of how to handle exchange rates, when to pay, when not to pay etc etc.
Having said that, the government's machinations are beyond even her accounting skills and believe me, AFIP (the inland revenue service) is not there to serve you, as is painfully obvious from the kind of work she does.
This would be me doing her job...
In my next life, I am going to marry an accountant. Not BE one, mind you, just MARRY one.
My husband and I are both hopeless at accounts, without even adding the lead weight of the ever-changing value (?) of the peso. My hat is off to your spouses. And to you, serafina , for jumping right on that mechanical bull yourself.
Splinter , could you please cut & paste the article? Not a subscriber, I can’t get past the headline. Thanks!
Reproduced here:
https://technocodex.com/argent…rds-currency-devaluation/
QuoteDisplay MoreArgentina is heading towards its seventh currency devaluation in 20 years, analysts say, as pressure builds on the peso and investors lose faith in the government’s ability to stabilise the economy.
The country struck a deal to restructure $65bn of foreign debt in August, shunting debt repayments far into the future. But financial markets remain fragile. Bond prices have dropped back down to distressed levels, equity prices have collapsed and the gap between the official and black market exchange rates is widening.
Analysts and investors think that with just $1bn in liquid reserves to hand, Argentina’s central bank will be forced to tighten restrictions on imports and reset the peso at a new, much weaker value.
“They are on a collision course [towards a devaluation]. The question is how long it takes,” said Alejo Costa, a strategist at BTG Pactual, a Brazilian investment bank. “If they keep postponing a devaluation, the inflationary impact will only get larger — and more [politically] destabilising . . . but this kind of administration only devalues its currency when it is forced to.”
Local savers and businesses have little faith in the peso’s value. Under the official exchange rate set by the central bank, one dollar buys 77 pesos. But on the black market, it buys more than double that — a record gap.
A devaluation poses a problem because it would push up inflation at a time when prices are already rising very fast.
Already, the official peso rate has dropped 22 per cent against the dollar so far this year, in a slide that accelerated in early October after tighter capital controls were introduced.
The government has sought to control the currency’s pace of decline, with measures including tighter capital controls and lower taxes for the agricultural powerhouse’s soya exporters. But those measures are unlikely to have much impact, say analysts. Reserves fell by $1.2bn in the second half of September after they were announced.
“Unfortunately, the measures have not created any incentive to increase the supply of dollars, so the central bank is clearly scraping the bottom of the barrel in search of more dollars,” said Martin Redrado, a former central bank governor. A $3.1bn loan from the Bank for International Settlements could help to buy some time, he said.
Given the crisis of confidence facing the government, authorities had only two options, said Miguel Kiguel, a former finance secretary. One is simply to devalue the peso, like the last devaluation under a Peronist government in 2014 when the currency lost about a quarter of its value — although that might not be enough this time around.
They can hold on for a very long time through tighter and tighter capital controls. But that’s moving policy in the wrong directionThe second option is to introduce a formalised dual exchange rate system, with many operations moved to a new weaker exchange rate, but a much narrower gap between the two rates than exists today.
“The government is trapped in a very difficult situation where any alternative has costs . . . [but] it’s going to be very hard to maintain the status quo,” he said. “But more than that, they need an integral economic plan, otherwise [any success] will last the blink of an eye.”
The IMF, which has lent Argentina $44bn since the country’s last currency crisis in 2018, may help towards the implementation of an economic plan to restore calm to markets. The multilateral lender, which sent officials to Buenos Aires on a fact-finding mission last week, is unlikely to demand tough austerity measures in return for assistance at a time when poverty has risen to more than 40 per cent due to the pandemic.
Argentina’s coronavirus lockdown has been one of the longest and strictest in the world, exacerbating the economic blow. It has just been extended once again to October 25.
One former official believes the government will be forced to act by the end of November because this year’s steady depreciation in the peso of about 2 to 3 per cent a month would no longer be sustainable. “Although the government might be able to hold on for longer than many think, once the situation accelerates, it goes fast. It looks like there are practically no breaks on this dynamic already.”
Proceeds from the farming nation’s soya exports are due to start arriving by March, prompting many analysts to believe the government could “muddle through” perhaps until the middle of next year.
But with midterm elections due in October next year, that strategy would be risky for the government. Deeper economic strain could compromise the re-election chances of the Peronist government in 2023.
“They can hold on for a very long time through tighter and tighter capital controls,” said Graham Stock, head of emerging market sovereign research at BlueBay Asset Management. “But that’s moving policy in the wrong direction . . . Politically, that’s very dangerous, as it would be a symbol of very low confidence in economic management.”
“They are caught between a rock and a hard place,” Mr Stock said, pointing to the impact of the pandemic that has aggravated a recession now in its third year. “There are no easy answers.”
No good options here. Thanks for this good analysis of each possible path.
This observation stood out, and again raises questions about F&F lockdown motives:
“[The IMF is]. unlikely to demand tough austerity measures in return for assistance at a time when poverty has risen to more than 40 per cent due to the pandemic.”
I have always wondered: Why HAVEN’T they ever cracked down on the blue dollar exchange houses?
I do remember the Macri attempts, which didn’t seem that serious. We never had any trouble finding cuevas; why did they? And our regular cueva changed names but has remained in the same location for years.
Ok when will it happen this week or next week......?
Oh Thank God. What a relief.
His word is his bond.
