Wednesday, April 17, 2013

Argentine peso blues update

The chart above is an updated version of the one I posted last month. This is like watching a slow-motion train wreck. Argentina is headed for another big devaluation, and the economy—already suffering from restrictions on imports and capital flight—is going to take a big hit. The so-called "blue" rate shows that the market is expecting a devaluation of the official rate of more than 40%. It's starting to get ugly.

As I mentioned in my prior post, visitors to Argentina will want to take lots of $100 bills with them, rather than relying on ATMs and credit cards to pay their expenses. Dollar cash is in huge demand in Argentina, because the central bank is growing the supply of Argentine currency at the rate of 40% per year, effectively debasing the currency in a major way.


WimpyInvestor said...

Any insights on Gold and Bitcoin demand in Argentina?

Also, please comment on the latest Reinhart & Rogoff controversy. Your insights on austerity vs. growth always appreciated!

Gloeschi said...

Thanks for the update. Where do you get the data for the "blue" peso exchange rate (just curious). Tx.

William said...

Venezuela must be in the same boat, No? Or is their oil production protecting their currency for the moment.

My question is when will the population of Argentina ever learn? I believe that since the 1970s they have defaulted on their debt twice which caused depression-like conditions in 2001 after the last default.

Scott Grannis said...

I get the "blue" rate for the peso from Bloomberg. Bloomberg calculates it by comparing the price of Tenaris stock (TS) that trades in the US (the ADR) to the price that it trades at in Argentina.

Federico said...

Blue dollar in Argentina is from the speculators to dumb foreigner from Bolivia and Peru, who work and live there. nobody with brain in Argentina buy blue dollar or official dollar, only Importation company’s use just the official.
this chart is just stupid.