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Argentina's Currency Black Market

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Re: Argentina's Currency Black Market

#31

Post by warseph »

pmelendez wrote: post #29
rafaelm wrote: post #12

Earlier quoted context omitted.

Right now the official rate is Bs.6.3 per dollar. The black market rate is just getting to Bs. 50/$. Thats one of the reasons we are set to have a 50% inflation rate this year. My monthly salary has withered away and as an engineer I'm making just over $200/mo.

Fellow Venezuelan here (although living outside of the country right now) I have hard times explaining to people how the economy works over there. Most people overestimate how harmful is a regime under foreign currency exchange control. But some metrics like the big mac index ( http://www.economist.com/content/big-mac-index ) can give a rough idea of what is happening.

In Argentina the Big Mac's price is actually regulated by the government (http://www.slate.com/blogs/moneybox/2012/05/01/why_big_macs_... the prices shown in that menu are about double now, except for the big mac, which is still ~30 pesos). Just another example of how much our government controls metrics here. I'm surprised the same thing doesn't happen in Venezuela, though, as Cristina Fernandez seems to have copied almost her entire "economy model" from Chavez's.

Re: Argentina's Currency Black Market

#32

Post by MichaelTieso »

Half of my family is from Buenos Aires and I often go back to visit. It's crazier than you think over there.

Not too long ago they made it illegal and very difficult for any Argentinean to take out their own money from the ATM. The government is trying really hard to keep everyone inside the country and only spend money within the country.

So for anyone visiting Argentina anytime soon, bring as many US dollars as possible. It almost makes traveling in the country cheap if you black market exchange it. It basically doubles your money.

Re: Argentina's Currency Black Market

#33

Post by Danieru »

aqme28 wrote: post #14

I remember this little joke about Argentine inflation: It's cheaper to take a taxi than a bus, because in a taxi you pay at the end of the trip.

That is a funny joke but after I read it outloud to my friends I got confused. How is it cheaper? One would enter the taxi with pesos. These pesos do not go up in value. Instead the cost of the rides go up. Thus you would want to pay sooner rather than later. Of course there is no joke in saying the bus is cheaper.

Unless one entered the taxi with US dollars. Yet in theory the exchange rate should match inflation. To me the joke would only make sense under hyper-deflation.

Re: Argentina's Currency Black Market

#34

Post by pmelendez »

warseph wrote: post #31
pmelendez wrote: post #29

Earlier quoted context omitted.

Fellow Venezuelan here (although living outside of the country right now) I have hard times explaining to people how the economy works over there. Most people overestimate how harmful is a regime under foreign currency exchange control. But some metrics like the big mac index ( http://www.economist.com/content/big-mac-index ) can give a rough idea of what is happening.

In Argentina the Big Mac's price is actually regulated by the government ( http://www.slate.com/blogs/moneybox/2012/05/01/why_big_macs_... the prices shown in that menu are about double now, except for the big mac, which is still ~30 pesos). Just another example of how much our government controls metrics here. I'm surprised the same thing doesn't happen in Venezuela, though, as Cristina Fernandez seems to have copie…

Well is hasn't been regulated yet because it is an "imperialist" product hence it is a luxury. But most products are regulated in Venezuela too, and those products are scarcity now because nobody likes to produce without profit and there is not enough money to subsidize all of them and cover the whole demand.

Re: Argentina's Currency Black Market

#35

Post by wslh »

bedhead wrote: post #11

All self-inflicted wounds. Argentinians could have a stable currency and a thriving, functional economy - there's nothing structural that's stopping them. But they choose not to, and have been making this choice for they last 100 years or so. It's a true pity.

No, the problem is structural: bad routes, no security, no mobile infrastructure, no energy (I am not talking about potential energy), bad education, bad transport of goods between cities. And I am not talking about corruption yet... you can bribe anybody in a direct way with witnesses around.

You can say that Argentina has all the ingredients to be a first world country but it is just a hope to be at that point.

For example, since Argentinian security forces don't work as expected, a shopping center has extra security personnel and on each shop there is another layer of security guards.

Re: Argentina's Currency Black Market

#36

Post by Fargren »

MichaelTieso wrote: post #32

Half of my family is from Buenos Aires and I often go back to visit. It's crazier than you think over there. Not too long ago they made it illegal and very difficult for any Argentinean to take out their own money from the ATM. The government is trying really hard to keep everyone inside the country and only spend money within the country. So for anyone visiting Argentina anytime soon, bring as many US dollars as pos…

Are you talking of the "corralito"? That was over ten years ago, so I'm not sure if that's what you mean by "not too long ago". You make it sound like it's still happening.

Re: Argentina's Currency Black Market

#37

Post by jhandl »

MichaelTieso wrote: post #32

Half of my family is from Buenos Aires and I often go back to visit. It's crazier than you think over there. Not too long ago they made it illegal and very difficult for any Argentinean to take out their own money from the ATM. The government is trying really hard to keep everyone inside the country and only spend money within the country. So for anyone visiting Argentina anytime soon, bring as many US dollars as pos…

The disinformation in this one is strong. It's not illegal nor hard to get money from ATMs.

Re: Argentina's Currency Black Market

#38

Post by crdoconnor »

pilom wrote: post #4
aristus wrote: post #3

Venezuela's official rate has been about 1/5 of the black market rate for many years. I remember my wife shooing me into a corner at the airport while she traded dollars for bolivares with the security guards. The differential has caused all kinds of effects. Plane tickets are hard to come by because so many people take advantage of the spread by flying somewhere, buying goods at official, returning for cash then tra…

I took a trip there in 2011 and 1/5 sounds a little off for what tourists could get. Officially at the time $1 would get about 4.5 bolivars. Unofficially, we could get around 7-9 bolivars per $1. We were pissed because we didn't know about the exchange rate issues or the ATM restrictions. We ended up going to a bank every day to withdraw the max on 3 different cards. Probably would have saved about $60/day if we had…

I was there last year and the rate seemed to be between 9-11.

Re: Argentina's Currency Black Market

#40

Post by nickff »

Danieru wrote: post #33
aqme28 wrote: post #14

I remember this little joke about Argentine inflation: It's cheaper to take a taxi than a bus, because in a taxi you pay at the end of the trip.

That is a funny joke but after I read it outloud to my friends I got confused. How is it cheaper? One would enter the taxi with pesos. These pesos do not go up in value. Instead the cost of the rides go up. Thus you would want to pay sooner rather than later. Of course there is no joke in saying the bus is cheaper. Unless one entered the taxi with US dollars. Yet in theory the exchange rate should match inflation. To…

The idea is that you are billed a nominal value, whose rate is fixed when you contract the service. Since the rate is always agreed to at the beginning of the trip, the time of payment has an impact on its value.

This joke is essentially the opposite of debt deflation (theory of recessions), as described by Irving Fisher;[1] the theory states that the debtor loses money during deflation, causing repayment problems. In the bus/taxi joke, the rider is a debtor, and the taxi driver is a creditor, with the length of the ride being the term of the loan. The inflation is essentially devaluing the loan.

[1] http://en.wikipedia.org/wiki/Debt_deflation

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