Argentine government ‘dollar clamp’ suffers another court defeat
A court in the Argentine province of Cordoba ordered the Banco Nación to sell US dollars to a teacher, after she was authorized by AFIP tax agency to purchase Brazilian Reais, but could not do so due to lack of currency.
Under the cumbersome ‘dollar clamp’ system imposed by the administration of President Cristina Fernandez Argentines have limited access to foreign currency and since last July are banned from saving in US dollars. The Argentine president went as far as publicly reprimanding several of her ministers for having savings in US dollars.
Because of the controversy over pending defaulted bonds Argentina remains outside the voluntary money markets and the Central bank and Treasury need to accumulate sufficient US dollars to pay for imports and to honour foreign debt, capital and interest.
However in this case the teacher from Rio Cuarto City and planning for holidays in Brazil complied with all the paperwork and finally was allowed by the AFIP tax office to buy Brazilian Reais for the equivalent of 6.745 Pesos (approx 1.200 dollars at the official rate of 4.95 Pesos to the US dollar). But no exchange bureau or bank would sell her the Brazilian currency.
Her lawyer, Mariela Fillipi filed an urgent an urgent junction in which she requested a federal court to allow the teacher to purchase dollars instead of Reais which was accepted.
In related news the Argentine Central Bank Governor Mercedes Marcó del Pont said that the hike in the so-called “blue” dollar is “clearly a seasonal phenomenon” and considered that “it should not affect the costs set by price-makers.”
Marcó del Pont highlighted that the “blue” dollar’s influence is “marginal and does not affect exchange market operations” where the Argentine government since last July 5 prohibited the purchase of foreign currency for saving purposes.
“The dollar bill has been linked to the demand due to tourism, with a high seasonal impact,” said Marcó del Pont, also linking it to “black market activity” which cannot access the official market. However, Argentine tourists who wish to travel abroad and who have obtained clearance from the AFIP tax agency to purchase foreign currency complained that when the time to purchase comes, banks or exchange offices inform them that they are not cleared for such operation.
The “blue” or parallel dollar closed on Friday at 7.30 Argentine Pesos, which compared to the price offered in banks and exchange offices of 4.96 Pesos, the difference amounts to 45.16%. In tourism destinations such as Uruguay, Chile, Brazil and Paraguay the Argentine Pesos are exchanged for the equivalent of 8 Pesos to the dollar.
In December 2010 the difference between both prices was around 2.5%, while in December 2011 it grew to 9.72%, the rising difference being due to the national government implementing more control of the foreign currency market. At the end of 2012, when the official dollar price was around 4.90 Pesos and the “blue” at 6.79 Pesos, the difference was 37.7%.
Argentine economists consider that the hike in the “blue” dollar price, which has already increased 6% in the first ten days of 2013, reflects an exchange gap which is not registered on the formal market, and which will derive in higher inflation.
However contrary to what had been strict policy, President Cristina Fernandez in her latest national broadcast, the first one of 2013 mentioned five times the word “inflation,” which came as a surprise to many.
After denying for years the increase in prices, President Cristina Fernandez and her cabinet started to recognize in a indirect manner that the national statistics bureau INDEC methods, which are severely criticized and questioned locally and internationally, do not reflect the real price situation.
One of the leaders from the main opposition Radical party Deputy Ricardo Alfonsin said in an interview that inflation in Argentina is caused by the government’s “clumsiness” and “ineptitude” plus a soaring budget deficit and profligate spending.
Buenos Aires City Cabinet Chief Horacio Rodríguez Larreta said that the recognition of an increase in prices is “good news” adding that “acknowledging the problem is part of the solution”.
Although official Indec inflation is below two digits, private sector and unions’ estimates, based on an average of several economic advisory offices and released monthly by opposition members from Congress put the index in the range of 24%, while inflationary expectations are estimated by Torcuato Di Tella University Economy and Polling Department at over 30%.
Argentina is also among the six countries with the highest inflation rate in the world, a list which includes four countries involved in violent civil strife.
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29 comments Feed
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For years Argentina has been told that their economic policies would not work and the replies were continually about their high growth, increased social spending and paying down debt.
The problem is that Argentina stole from her future economic growth to grow faster in the past. And now it is stopping.
There is no high growth now
Inflation has eroded all that increased social spending.
And the pursuit of debt repayments has led to currency disarray and funnily enough debt will start growing again. Argentina's nominal GDP is now shrinking and because its debts are predominantly denominated in US dollars, as a percentage of GDP this will grow.
Lie all you want about GDP growth and inflation, but the market is telling us the real inflation figures and the real exchange rate.
Seems like Argentina is heading backwards AGAIN.
And let's not even compare its absolute decline compared to its neighbourhood. Quite embarrassing really.
Is this story saying, If I was an Argentine doing the same, I would send a lawyer to court for it? bloody marvelous state of affairs if ever there was one.
Having said that, when the in-laws come for a visit in November they are going to find it very difficult to live on the amount of cash AFIP allows them each day, even if they are staying with me...
@5, she clearly said at the Mar de La Campora submarine base that she 'never lies and never cheats', so how dare you suggest that she lies about her degrees and the economy, and cheats Santa Cruz out of $520million and Aerolingus La Campora out of $2.3 billion.
How dare you!
She is a stupid cow.
I think 10/1 peso (blue) by 3rd quarter 2013 and if they can avoid hyperinflation I will be shocked.
Mental. They want to increase monetary base? the devaluation will only work if there is no inflation. If inflation continues then you're just in the same position but with a weaker international currency. On eofthe things keeping CFK in power is the fact that, with the artificial exchange rate, people feel richer as they can go abroad...
en.mercopress.com/2012/05/30/if-lucky-at-the-end-of-the-labyrinth-cfk-might-bless-you-with-a-few-bucks
”TWIMC:
Article says:
“If lucky at the end of the labyrinth, CFK might bless you with a few bucks”
I say:
Labyrinth?
Let's see.....
The AFIP website asks users for:
1. CUIT: 1234567890
CUIL : 0987654321
DNI: 5647382910
2. First and last name: El Think
3. Birth date: 01/04/1912
4. Occupation: Argie
5. Country of origin: Argentina
6. Reason for travel: Educational
7. Departure date: 30/05/2012
8. Return date: 31/05/2012
9. Travel agency CUIT number: 666-999-666
10. Mode of transport: Private jet.
11. Amount of currency you wish to purchase (in pesos): 100
Woooooow.
It took two minutes.....
May I get another one?....
That ”Labyrinth took
”
Reminds me of the Soviet Union, laws are for thee not for me. The Politburo had any luxury they wanted and the rest of people starved.
But argies who do that get a nasty letter from the credit card company by order of their government AND hefty fees (fines) to go with it.
Nice huh?
and they pretend to have no idea they are living under a dictator.
Sheesh
INDEC release theirs tomorrow, I can tell you what they'll be..... 0.9% again...
An economy needs breathing room to work. The productive deserve the benefits of their work, not to have it taken by a bunch of oxygen wasters.
You say…..:
”Does it ever both you that all the articles about the Falklands have over 200 comments no matter how trivial, while other issues get a whopping 30 at best?”
I say…:
You mean like this article about ~25% of USA’s children on Food Stamps; “sarcastically” commented by 1 (one) Chilean Neo-Liberal poster?
en.mercopress.com/2013/01/14/twenty-million-us-children-one-in-four-received-food-stamps-in-2011#comment206073
Ps:
Nice caption of Ms. Marcó del Pont.........
Ahhhhh.... If I only was 100 years younger......
The tree does not concern itself with the activities of the ants.
Great Article:
The Deadbeat Wears Prada
It kind of makes me sick when the deadbeat wears Prada. Such is the case with Argentinean President Cristina Fernandez. Argentina overwhelmingly voted her in as President and she immediately borrowed vast sums of money. This influx of cash jet-fueled an economic bubble which predictably popped. Then the bills came due for all the money she had borrowed during Argentina’s economic boom.
Rather than paying the piper and facing the obdurate, double-plus unfunny task of cleaning up after her socialism party, Fernandez made like a good Marxist and socialized some of the losses from her own economic mismanagement. Anyone dumb enough to buy Argentinean bonds got stiffed like a co-star in an old Harry Reams film. Argentina defaulted on its debt payments and referred to some of the hedge funds which hold the now worthless Argentinean paper as “vulture funds” because they refused to take a haircut and attempted to make Argentina’s government answer for their behavior in court.
...
We now discuss the problem with that entire empathetic line of thought. The poor deserve better than Fernandez, but they were all both stupid enough and cynical enough to vote for the Wicked Witch of Buenos Aires. They were stupid enough to believe she could serve them a free lunch, and they were cynical enough to let themselves be used as hostages against the rules of an orderly financial market.
www.redstate.com/2013/01/15/argentina-the-deadbeat-wears-prada/
#5 she will admit it when UK admits to the illegal occupation of Islas Malvinas Argentina and US admits to turning Muslims into terrorist at the CIA.
#7 if this idiots keep saving in dollars hyperinflation is warranted its all dictated by the laws of demand and supply of pesos, no demand for pesos is equal to 0.00$ value, I don't think CFk has the power to buy all the pesos to create a price.
#8 I Like CFK, if you don't! go to USA where you can be payed in dollars.
#9 the hope is that they will all go out and learn how good they have it in Argentina.
#17 we all have to declare and pay taxes.
#27 you are surely talking about menem because in 2001 there was no money for anyone. And since 2001 no credit agency trusts Argentina.
In the case of the economists, who some of them are just lobbists of different corporations, make no more than the tipical mediocre analysis, and blame just the erratic policy that the govt. uses to control the prices.
Both just emphasize in the lack of reliable indexes from the indec, however none of those insignificant politicians, or puppets lobbists say absolutly anything about the huge economic concentration that we have in the most important sectors of our economy, like foods and metalic sectors.
None of them criticse the abuse of those oligopolic sectors, which increase the prices of the products, and restrain the necesary inverstments.
Beside, they have never criticised either, the lack of economic support to the enterprices by the private banks, due to most them just give credicts for the adquisition of different goods. Just the public banks have always given economic support to the enterprices. I hope that now it changes, after the reform the of charter of the central n¡bank, which forces all the banks to ceade the 5% of their huge profitabilities, to the economic support for the enterprices, i read that most banks complied already with the new rule, let's see what happens.
Anyway i don't deny that the policy of our govt. that it uses to control the prices is obsolet, and it's not working, but the the problem of the inflation level is much more complicated than the hipocrite analysis of those so called politicians and economists, and it will take many years to solve it.
At this moment arg. doesn't have the structural problems which have always provoked huge inflation levels or hipper inflation, because it doesn't have neither a hight debt, nor a hight fiscal defict, beisde, it's not going trough any deep economic crisis.
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