Does this also mean you can't change peso's to dollars that easy?
Printable View
Does this also mean you can't change peso's to dollars that easy?
Underground market may improve: exchange rate
[quote]BUENOS AIRES (Dow Jones)--In a new bid to tighten control over the foreign-exchange market, the Argentine government will start checking the tax records of every person who tries to buy dollars, the director of the tax collection agency, AFIP, said in a radio interview Tuesday.
"We're focusing our work on tax evasion in all segments," AFIP Director Ricardo Echegaray said.
Echegaray said the government will require individuals to justify their income and prove that they have legally earned enough money to buy a certain amount of dollars or other currencies. He said AFIP has been working with the Argentine Central Bank for months to create a way of determining whether people have the justified "fiscal capacity" to participate in the exchange market.
"If you go buy dollars today, in AFIP we're going to be able to say, 'Oh, this person is buying an amount that surpasses his purchasing power.'" Echegaray said.
Though Echegaray focused on AFIP's tax-evasion aims, analysts said the new measure really aims to help the Central Bank more easily control the peso's value.
"More than anything else, this is to diminish the demand for dollars," said Fernando Izzo, an analyst and currency trader at ABC Mercado de Cambios. "I don't think it'll do much to control the market because it won't affect business demand, but will surely slow the sale of dollars to smaller retail buyers. It will slow sales at bank windows to individuals."
Over the past year especially, the Central Bank has worked with other government agencies to crack down on the market. Banks say government tax officials closely observe their transactions and often imply that if Central Bank orders aren't followed, the banks could face tax trouble.
Central Bank official say they're simply enforcing exchange-rate policies.
The monetary authority has kept tight control over the peso, making sure that its value doesn't fluctuate abruptly as have other currencies in the region.
"For now, the central bank has the currency very dominated in a band that ranges between ARS3.80 and ARS3.81 (to the U. S. Dollar)" Izzo said. "After the recent congressional election, it wanted to send a signal to the market that it could control the exchange rate."
Izzo said the peso is likely to decline slowly in value until it reaches around ARS4 or ARS4.05 by year's end.[/quote]
Since the elections the exchange rate has been stable.
The fiscal surplus has turned in a deficit, let's wait how this will end up
"By Matthew Cowley.
Of DOW JONES NEWSWIRES.
BUENOS AIRES (Dow Jones)--Argentina's government will accept the "consequences" of a revision of consumer inflation data going back to 1999, Economy Minister Amado Boudou said Tuesday.
The revision is part of a broad overhaul of the government statistics institute, or Indec, unveiled Tuesday to bolster the institution's credibility. The changes were issued in a decree signed by President Cristina Fernandez.
There are widespread accusations that the government meddles with the Indec data, and inflation numbers in particular. Officials have always denied the charges, saying the numbers are no less reliable than data presented."
Link: [url]http://online.wsj.com/article/BT-CO-20090721-718110.html[/url]
It's not surprising that Indec was flawed in its inflation calculus, but it is surprising (to me, anyway) that Kirchner admitted it. There are only two reasons she would do it that I can think of: (1) she really, really needs access to international credit markets and this is perceived as a way to help get there; or (2) someone else made her do it, such as Hugo Chavez.
Someone tell me: What does it mean when the government says it will "accept the consequences of a revision?" As I recall, Argentina has inflation-linked debt. Are these bonds tied to the rate published by Indec? If so, I imagine the country will owe a fair chunk of change to its creditors holding those bonds. In this case, is that Chavez? Or, were the bonds he bought dollar-denominated and not tied to Indec-tallied inflation data?
[QUOTE=Stan Da Man]Someone tell me: What does it mean when the government says it will "accept the consequences of a revision?" As I recall, Argentina has inflation-linked debt. Are these bonds tied to the rate published by Indec? If so, I imagine the country will owe a fair chunk of change to its creditors holding those bonds. In this case, is that Chavez? Or, were the bonds he bought dollar-denominated and not tied to Indec-tallied inflation data?[/QUOTE]Think they are talking about the Boden Bond: (30 billion US) and is indexed to inflation. Payments (US dollars) are a product of the inflation rate and the normal coupon rate. Inflation up, your payments go up. There are numbers out there putting Argentina's real inflation rate at 30%. I cannot believe that number, but if it is, default. Chavez bought Boden paper, 500 million.
Argentina could be in a fix if the numbers are over the top. But what government does not cook the books concerning inflation rates. US official rate excludes energy and food. Give me a break.
[QUOTE=Damman]There are numbers out there putting Argentina's real inflation rate at 30%.[/QUOTE]I don't have any objective data, but it sure as hell seems a lot higher. In the two years I have been here, some things (cheto restaurants) seem to have gone up 100%.
[QUOTE=Damman]Argentina could be in a fix if the numbers are over the top. But what government does not cook the books concerning inflation rates. US official rate excludes energy and food. Give me a break.[/QUOTE]Ha ha, the two things probably most likely to inflate.
When I was looking for the house I live in, everyone wanted a built-in 20% increase in the second year. It didn't use to be a standard thing until about two years ago, as I understood the real estate agents. Or maybe it wasn't as big an increase in the second year previously. This is my first actual long-term lease here, so I only have what things were at the time I leased, almost a year ago, to go on.
I believe the 30% number. Over the three years I've been here, I think I've seen a hefty-sized increase in general inflation, but I think maybe the touristy things are a little higher, the local things a little lower, so maybe 30% is the average. Certainly imported items are more expensive, and therefore inflated higher than local items, as the dollar-peso spread increases. I can go to Jumbo and get Cokes, Heinz Ketchup, Hunt's BBQ Sauce, etc, etc. But I stopped doing it when it started costing me $900 pesos a week to do that! That was one time and I was shocked - it had been a few weeks since the last time we visited Jumbo and they must have had a sudden rise in their prices.
For most things here, we can go to a local grocery store, which is about the size of a smallish 7-Eleven in the States. But they manage to pack just about every common daily thing in there, including a small carniceria, fiambreria and quesos in the corner across from the one register - very cramped and usually busy. I can get the local equivalents of everything I get at Jumbo (missing a few things that aren't real common here like peanut butter) for maybe $300 pesos. A trip to the local carniceria (they have a better selection than the grocery store) for maybe another $100 pesos. Another $100 pesos for fruit from the verduleria and and I've shaved 45% off my grocery bill.
I have four people in my house, so that's not bad. Amongst the 5-6 bags of bread products, cleaning products, eggs, milk, pasta, ketchup, etc, is the 4-5 kilos of meat, 8-10 kilos of fruit, and so on. A single person here could eat fairly cheaply still, particularly with the exchange rate.
I would liken the prices in the tourist, upper scale areas in the city to Jumbo out here. The smaller places a bit off the beaten path that don't ahve so many of the "comforts of home" may be cheaper if you're on a budget.
[QUOTE=Schmoj]I don't have any objective data, but it sure as hell seems a lot higher. In the two years I have been here, some things (cheto restaurants) seem to have gone up 100%.[/QUOTE]Why do you go there?
Check guiaoleo and see if the average price is in the 75-100 peso range
The gov. Is starting to run low on cash. They borrowed 1 billion peso from Banco de la Nacion. They will probably need more. If they borrow too much it will weaken the banks.
[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=ajBLZvNqshAk[/url]
I thought that the money they took from the pensions would hold them longer. Maybe there holding some of the pension money on the sidelines? Don't know.
[QUOTE=Tessan]The gov. Is starting to run low on cash. They borrowed 1 billion peso from Banco de la Nacion. They will probably need more. If they borrow too much it will weaken the banks.
[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=ajBLZvNqshAk[/url]
I thought that the money they took from the pensions would hold them longer. Maybe there holding some of the pension money on the sidelines? Don't know.[/QUOTE]Didn't they lose about 1/4 of the pension money to the New York judge who froze it on behalf of the bondholders they stiffed in 2002? I'm not sure exactly how much was frozen, but it was a substantial amount. The idea was: Once the Argentine government nationalized the pension plan, the individuals' funds became the Argentine government's funds, therefore subject to seizure by the stiffed bondholders. It was a rather clever move. At any rate, that may have put a hitch in Kirchner's giddy up.
Loan published Monday (7/27) but dated July 7?
[QUOTE]Argentina Retroactively Confirms ARS1B Loan From Banco Nacion.
Monday 07/27/2009 11:55 AM ET - Dow Jones News.
BUENOS AIRES (Dow Jones)--The Argentine government on Monday retroactively announced the details of a 1 billion peso ($262 million) loan from Banco de la Nacion to the Treasury, according a resolution published in the Official Bulletin.
The resolution, which was published Monday but dated July 7, says the Treasury will repay the loan in 24 installments beginning in January 2010. The loan is part of a program approved earlier this year in which the state-run bank can lend the Treasury up to ARS 7.3 billion.
Given its lack of access to international debt markets, the government has been increasingly relying on interagency funding to meet its financial obligations.
Last week the Argentine Central Bank said the government should focus on returning to debt markets to ensure it can continue to meet its financial obligations.
Economists have said this internal funding strategy is a ticking time bomb - a case, they say, of robbing Peter to pay Paul - because the agencies providing the loans will themselves at some time need the cash.
The practice of retroactively announcing the loans after they've become effective also makes it hard to track the total value of government debt in a timely fashion.
-By Taos Turner, Dow Jones Newswires; 5411-4103-6728; [email]taos. Turner@dowjones. Com[/email][/QUOTE]