Who controls the blue dollar rate?

There are 56 replies in this Thread which has previously been viewed 3,854 times. The latest Post (October 24, 2023 at 6:22 PM) was by Rice.

    Many Kirchnerites tell us that the blue dollar is simply a few blokes with phones and scooters darting around the financial district and therefore, nothing to be taken seriously.

    However, it is regarded as the true value of the peso/dollar, so how does it work? Is it just cuevas (illegal exchange dens)? How many people are driving this?

    I'm curious.

    Quote from Splinter

    Many Kirchnerites tell us that the blue dollar is simply a few blokes with phones and scooters darting around the financial district and therefore, nothing to be taken seriously.

    However, it is regarded as the true value of the peso/dollar, so how does it work? Is it just cuevas (illegal exchange dens)? How many people are driving this?

    I'm curious.

    I’m so curious about the same question, Splinter . Does anyone know someone who works in the financial sector?

    Hello everyone,

    I hope you all are awesome.

    I would like to provide you with these comments to allow you an understanding of what is going on in Argentina with the "Blue Dollar" exchange among other context situations.

    Kirchnerism people are the type of people that deny the obvious/reality. If you are talking to them and corner them with correct answers, providing them with evidence and historical facts, this is what might happen:

    - They start talking to you about anything else outside of what you're talking about. They get nervous and start yelling at you telling you that you are a Capitalist, you work in any Corporation business linked to the USA, etc.

    - They tell you that the companies are to blame. Macri is responsible for what we are today because he went for money to the International Monetary Fund (IMF). However, Nestor/Cristina Kirchner do not like IMF but they asked for money from China, Cuba, Venezuela, or Russia. Over their previous 12 years' mandate (2002, 2014) they negotiated a huge loan from Venezuela for 16% of interest/per year when the international market was shared by around 8%. Do not need where the difference went.

    - They deny what you tell them, with any ridiculous comment.

    Kirchnerism has consumed the dollars from the state coffers, during all its years, they have buried dollars in Patagonia, etc. All these cases were closed by corrupt prosecutors placed in power by Kirchnerism. During these last 4 years of Kircherismo, we went from having 1 unique exchange rate to buy American dollars to having approximately 14 exchange rates. If you wanted to go see ColdPlay in a neighboring country and you paid that show with a card, the banks would charge you that expense with the ColdPlay exchange rate + "Country Fee". If you went to Qatar for the football world cup, you had another exchange rate too, if you import products to make bicycles or anything, you have another exchange rate, and the same if you export meat or farm products, and final production. Of course, all these American Dollar exchanges are higher than the Official rate.

    - Exchange American Dollar Rates Links

    Throughout Argentina, the blue dollar, ("Dolar Blue" is how is it called in Argentina) exists and everyone buys it as long as they have the margin to do so.

    1. Here is a link where you can see the updated value throughout the day/month. There are many platforms, this is the one I like the most because it updates quickly --> https://dollarhoy.com/
    2. As I mentioned, there are many types of exchange rates listed/updated in the next link: https://www.ambito.com/contenidos/dolar.html

    If you are in Argentina, always try to use the "DOLAR BLUE" to exchange your bills, otherwise, you will get a lower amount of Argentine Pesos. You have to do it anywhere on the streets, but I recommend you to do it in trust places where you know to receive real bills. (nor fake money).

    Another topic to add to the comment is that some people can buy USD 200 each month in their bank using the official rate, but you have to pay 45% of Government taxes. For instance, If the OFFICIAL exchange rate is $AR 360 = UAS 1, then the exchange rate goes to $AR 522 ($360 * 1.45 = $AR 522). this tax was created by Kirchnerism many years ago to discourage people from buying dollars at the official exchange rate. It is for this reason that the "Dollar Blue" exchange rate was born, which is an informal reference value, unofficial, but recognized by the government and which rises or falls according to demand.

    I hope I have helped you a little to understand all these economic problems that Argentina has had since Peron came to the Government. We were 6th in the world ranking in 1920 before Peron, today Kirchnerism and Peronism do not leave us and we are in the 3rd worst country in the world with the highest inflation.

    I would like to clarify that Kirchnerism says they are a Populist party, but they have nothing of populism. They generate millions of poor people, and they sell them ideas for improvements giving them easy money, but instead of teaching people in need to fish, they give them the fish in hand. All the assistance plans that they say they have in place are only to provide the money to the political leaders, and the trade unionists, but beyond that, the money does not reach those who need it.

    Kirchnerism has been exchanging land with China with the exchange of large pieces of land in Patagonia. Kirchnerism makes contracts that the opposition parties do not know what is being sold in the country. It's crazy what's happening. I went to Tierra del Fuego (Patagonia) a month ago and I saw signs that say "China Government private property".

    My most sincere apologies for going so long in my comment.

    This past Sunday there were internal elections of the political parties and Kirchnerismo had bad results. On 22/October/2023 there will be Presidential elections. From what is said, the death of Kirchnerism is coming and it is right around the corner.

    Kirchnerism is presenting Massa as President of its party. Massa has already been the Minister of Economy of local government for a year now (4 economy ministers have changed in these 4 years). Cristina does not have any other options to keep herself in power behind the scenes.

    Kinds regards.
    S.

    You're spot on!

    But you've explained the what, which most of us know. The original question was about the why and how in terms of the rate determination.

    Actually lets get really speciific...

    The how is how is the blue dollar rate determined. And the why is why is it so rated based upon the how.

    And then there's the ultimate question as to the "who"? which means who is driving and determining the why and the how.

    Hello everyone,

    I hope U're doing well today.

    Let me tell you that I will explain to you the:
    - HOW injects official dollars into this parallel/informal market circuit to sell them at informal value.
    - Is the government involved in this?
    - WHY is this parallel market maintained? If the Kirchner government wanted to eliminate it, it would have been done.
    - HOW is the BLUE DOLLAR exchange rate controlled or got out of control?

    I will provide you the below answers some moment later today. I need to finish up some personal matters to get time to provide you with the answers.
    Splinter I appreciate you have tried to provide details with the Bloomberg link, but I am afraid that formal communicators might not feel free to say the truth. They try to do it, but they do not provide precise information for logical reasons.

    I am providing you with more insight into the history of BLUE DOLLAR (for those Kirchnerism people that say this is not real or whatever that says). BLUE DOLLAR was created in 2002 or 2003 around when the Kirchnerism party got into power as President with Nestor.

    https://www.dolarito.ar/cotizaciones-h…l-a%C3%B1o-2023




    Thanks, that's a fascinating graphic for comparison purposes.

    Hello everyone, I hope you are doing well.

    Before the end of the work week, I would like to bring you the information related to the WHO, WHY, and HOW of the Blue Dollar.

    Dollar blue is bought/sold in informal exchange houses that are usually called cave “cuevas” in Spanish. They are called this way because they are usually hidden from state controls.

    Prior to starting the explanation, let's define who are the mediators/entities involved in this process:

    1.- Wholesale Market Operators (WMO): this is a person who works in a private banking institution one of the 12 national and international financial banks in Argentina, such as Citibank, HSBC, ICBC, ITAU, Santander, MACRO, Galicia, and others. This person is a Subject Matter Expert in finance and knows all types of contacts and financial circuits perfectly. It is worth mentioning that Banco MACRO, a local bank in Argentina, is the one that carries out almost all government operations since they have money laundering interests and are carried out through this means. WMO handles large volumes of money within individual transactions of over USD 1 million.

    2.- Retail Market Operators (RMO): These people work with the same financial institutions as wholesale operators but move volumes of money below one million dollars. These operators work the transactions linked to the caves (Cuevas).

    Retail and wholesale operators have their private and not clean operations made by the understanding of the same bank representatives; remember they work in the same Bank’s money table.

    3.- Cave’s operations administrator: a person who manages the purchase of Dollar Blue in the cave and has direct interaction with the RMO.

    4.- Client of the Caves: any ordinary person interested in buying/selling dollars.


    # HOW to buy Blue Dollars

    A. Assumptions

    As a real fact, today, Aug/18/2023, the National Central Bank defines the exchange rates for the 12 dollar exchange rates at the time of the opening of the trading day, defining here the reference value for the Buy/Sell of the blue dollar as well. Today the stock market opened with the following values Buy/Sell - $AR 750/$AR 760.

    ===============================================================

    Note:

    Reference Value Buy = is the value that the Bank/cave uses to BUY currency.

    Reference value Sell = is the value that the Bank/cave uses to SELL currencies.

    The Bank uses this value informally by the RMO & WMO. This value is never used by the attendee at the front desk.

    When a customer wants to buy dollars, for example using $AR 10,000.0, the Bank always works with the "Sale" value, since these entities are going to Sell the bill, and this value is always higher than the "Buy" value.

    ===============================================================

    B. Process

    If a Client wants to buy dollars in a cave, the client contacts a cave administrator of one of the many caves to tell him/her that he wants to buy a number of dollars, for instance, usd 400. The cave administrator contacts the RMO and asks him if he has an availability of dollars and asks for the current exchange rate. The RMO answered with a yes and informed for instance the value of $AR 655. The cave administrator increases the % to that exchange rate to get his own profit, and he communicates to the client the final value. If the client is interested, progress is made in the operation.

    (In general, the Cave Administrators increase the exchange rate by between 1 and 5 points).


    The cave administrator continues his trading day with other clients and at the end of the trading day, he will see all the retail operators with whom he worked to exchange the values agreed on the day.

    The Cave Administrator delivers the money to his clients at some point in the day. The Client can buy dollars with Argentine pesos or sell dollars to obtain Argentine pesos.


    # HOW is that the Blue Dollar exchange rate goes up and down

    Small, medium-sized, and large corporations, and the same government, launder their assets through the Blue Dollar.

    A.- Companies: Many companies in Argentina lose a lot of money due to inflation, this is why they use this asset purchase/sale mechanism. Companies get dollars through Banks and treasury controls (IRS in the USA / AFIP in Argentina), buying MEP Dollars.

    MEP = EPM Electronic Payment Method

    This exchange rate is lower than Blue but higher than Official. If companies do not want to be controlled by AFIP/IRS they buy Blue Dollar.

    INFLATION is the EVIL of Argentina that generates all this problem, and companies like TECHIN, IBM, ROCHE, Globant, HSBC, etc., etc. ALL, implement this process to recover their investments consumed by inflation.

    Let’s provide an example where a company receives the payment of $AR 100,000,000.0 in July for a service that had provided in May (2 months late payment).

    In Argentina we are having 7% monthly inflation, although it is not linear, 2 months of inflation means around 12% devaluation of the money that these companies will receive. In other words, the company will receive 100.000.000 but with 12.000.000 lost by inflation, the company has in its hands a value of 88.000.000.

    Then, this company with those pesos buys a lot of dollars in the parallel market through the big leagues, that is, with the Securities Banking of the banks.

    In Argentina, the Blue Dollar exchange rises up sharply because many companies buy/sell dollars at the same time because of some market trigger. For instance, when Argentina has complications with the International Monetary Fund (IMF) in agreeing on whether to renew our loan or not. When an agreed expiration date approaches, if Argentina does not have dollars in its reserves, the entire Private Banking market speculates that there will be no more dollars in the market, so everyone tries to buy the few dollars that are obtained in the market.

    To support this example, today it was mentioned in Argentina that the Minister of Economy, Sergio Massa, agreed with the IMF to renew our loan. This caused the domestic market to calm down and the exchange rate values dropped by 15% in one day around.

    Another domestic capital asset is called the “Fixed term”. This asset is bought in Argentine Pesos and the owner of this asset provides a Bank an amount of money with interest as a return. Many people buy Blue Dollars after getting frozen their money in the bank for two or three months.

    B.- Government: The Government also uses this mechanism to launder money and assets. Buy MEP Dollars through Banco MACRO and then send millionaire transfers to frontmen abroad or even in the country. This is known by everyone who understands a little about this type of operation in Argentina. This is how Cristina laundered thousands of bags full of dollars with her ghost hotels in Patagonia where she said she housed the crew of Argentine airlines and laundered dollars.


    Now you know why the exchange rate flies through the skies.

    Let's see why it goes down, but not that much.

    If the government would decide to make the Blue Dollar exchange rate go down, then the Government itself through the National Central Bank opens Pandora's box (Federal Reserves) and begins to sell huge amounts of dollars to the market through the banks. This massive injection of dollars into the market calms down the demand for the purchase. Argentinean Government does this when it knows help from IMF will arrive.


    This unstable, fragile, and vulnerable economic infrastructure was created and maintained by Kirchnerism to steal money.

    The IMF has already realized this operation of the Kirchner government and they no longer give us money. Last time and this month of August, they will give us interchangeable documents that are equivalent to money but will only be used to exchange Argentina's debt with China, Russia, with the world. These Kirchnerism politics are unpresentable. They say that private companies are the ones that generate all this problem, but, the problem is generated by the Government manipulating the Central Bank to make it carry out operations that are not proper for the Central Bank. That is why the new candidate for President, Javier Milei, wants to eliminate the Central Bank. The Central Bank was created by Peron in 1943 approx. It was only going to last 30 years but given another use than to steal money and make bad operations, it was never closed. When Argentina was the sixth country in the world ranking back in 1923, we did not have a Central Bank.


    Personal Real facts:

    Last 16/August I sell a couple of American Dollars in a cave to get Argentine Pesos. Look at the image I am attaching to you to know where the money comes from, HSBC Bank.

    Kind regards.

    Thank you for spending all this time unwinding the complicated money system for us, sdemuria . I’ve read it twice, and I am still overwhelmed. How did the Kirchner mafia get away with their thievery? How did even the earlier Peronist regimes get away with their manipulation of the Central Bank?

    My LARGE question is this: is Milei’s proposed elimination of the Central Bank a good start? Where would he go from there? Does he have a detailed plan for reigning in the crazy currency circus?

    My practical question is this: with the big difference between the official and blue rates, what stops people from using both systems for monetary day trading? That is, why couldn’t someone exchange US$100 US for the blue compra rate of 75,000 pesos in a cueva, then exchange the 75,000 pesos at the official venta rate of 367 pesos/dollar, ending up with US$204? Is there any prohibition besides the now-lowered number of dollars anyone can take out of the bank each month?

    Your idea Rice doenst work.

    You are unable to buy USD at the official rate ( well unless you are a Kirchnerista....

    In theory, you can buy USD200 per month via online banking.

    The system will fall just before you are about to become rich!!!

    Or you will be disqualified for some reason that only the online system understands.

    Dang. And I was so hoping to become as rich as Cristina, in no time flat! GlasgowJohn , you sure know how to dash a person’s hopes.

    Seriously, I was wondering what official firewall prevents enterprising people with bank accounts from turning that USD200/month into USD400. But thinking about it. I realize there doesn’t have to be an official firewall. It just wouldn’t be allowed to happen.

    Hello Rice, I like your questions :) tks

    Kirchnerism has generated a systematic plan to generate poverty ever. They always wanted people to depend on the money from the state. They have never given poor people the opportunity to get an education, help them find work, create businesses, etc. Kirchnerism generated laws with which they gave more money to people who had children, as many children you have, as much money you receive. Poor families come to have 9 children with the sole objective of receiving more money. This was fulfilled with the printing of banknotes.

    It will not be easy to change what was created over the years.

    Going to your questions:

    - The Central Bank is not the problem here, the problem is the functions assigned to the Central Bank.

    - Javier Milei has already presented his economic plan in the media. It is not going to eliminate the Central Bank, but it is going to limit its functions because what they do today is nothing more than obstacles so that a country can grow.

    - The operation with the difference of the official blue rate that you mention is very common to do and many people do it this way to generate extra help at the end of the month.

    However, this is a perverse scheme to control people about what they can do to survive. Today the exchange gap is very high, due to economic problems in the market, but it does not always have this great gap that allows this business to be done. By the way, it does not leave you a big difference, and let me tell you the reason why.

    ==> When you buy US$ 200 US at the Bank, the rate is not $AR 366, the government charges you a Tax fee of 45% to that exchange rate, so the real rate comes to $530. This percentage figure es increase eventually over time by the Central Bank to reduce the chances to do what is called "the curl/the return". This way, the few difference at the end, does not help.

    For instance, in July (below image) the difference rate between Blue and Official was $AR 522 and $278, respectively. $278 becomes $AR 403 applying the "Country Fee" of 45%.


    This narrow window to do the curl is a perverse, controlling, and manipulative system generated by Kirchnerism.

    - Why do people need to be controlled this way?

    - What would a professional earning AR$400,000/month do to protect his principal from inflation? Would you leave it in pesos or buy dollars? If you buy dollars, what exchange rate would you use (Bank only)? If you buy the US$ 200 through Bank, you are not allowed by IRS/AFIP to get Dollar MEP (another useful option).

    Latest news :)

    - Do you know who is this person?

    Eugenio Raúl Zaffaroni - Wikipedia, la enciclopedia libre
    es.wikipedia.org

    - He was Kirchnerism's right hand in the justice supreme corte and last week was assigned to a prestige role in the Vatican by Francismo the Pope.
    If you do not know the Pope is Peronism and Kirchnerism. :(

    Unbelievable....

    Thanks Rice for you comments.

    This implemented economic strategy is discouraging, that's right.

    What a professional with a salary does is buy the largest amount of Blue or MEP dollars so that the pesos do not deteriorate month by month.

    Thank you for your comments and questions.

    I hope you can visit Argentina to enjoy its beautiful people, food and landscapes.

    Big hugs and have a nice weekend. 🤗