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Argentina to Revalue Currency


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Argentina To Lower Price Of Illegal Dollar, Radio Mitre Says

Argentina’s government plans to force currency exchange houses to start quoting the U.S. dollar at between 5 and 5.1 pesos instead of 5.9 pesos in the unofficial parallel market, Senator Anibal Fernandez told Radio Mitre today.

An illegal market in foreign currency has flourished since November, when President Cristina Fernandez de Kirchner ordered that all currency transactions require tax agency approval. The government met yesterday with the main foreign-exchange houses and they will offer the dollar at 5.1 pesos per dollar on June 4, Fernandez said. He didn’t elaborate on how the government would enforce this.

Separately, La Nacion reported today that banks in Argentina are asking clients to join waiting lists to withdraw dollars from their own dollar-denominated bank accounts. The newspaper didn’t cite its sources on the story.

To contact the reporters on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net; Richard Jarvie in Buenos Aires at rjarvie@bloomberg.net

http://www.bloomberg.com/news/2012-06-02/argentina-to-lower-price-of-illegal-dollar-radio-mitre-says.html

Some quick math on this, they are going to start quoting the Argentine Peso at nearly 16% higher on MONDAY!

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It won't let me edit my original post, but I realized I made a typo when I said 16%, it is really almost 17% higher. Meaning despite the comparative 10% appreciation of the dollar in the world, Argentina is increasing the value of THEIR peso, vs US Dollar. To really simplify this means that their people will be able to buy more US dollars with their peso.

A 10% increase in the Dollar vs an 18% increase in the local markets of the Peso, would be some sort of convergence of inverses. Buying more of the valuable dollar, by lowering their exchange rate so that their citizens can benefit from this EXTREMELY valuable dollar.

In essence, by increasing the value of the peso by 18% would actually be a much higher number than this, more around like a 25% increase in purchasing power. (the 25% is just a rough estimate)

Edited by EternalReality
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