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Montevideo, November 16th 2018 - 20:25 UTC

Argentine Peso stabilizes, country risk falls and stock market rebounds

Wednesday, August 15th 2018 - 07:11 UTC
Full article 10 comments

The Argentine peso climbed on Tuesday after the Central bank implemented a raft of measures to stabilize the volatile currency on Monday, including increasing the benchmark interest rate to 45% from 40% previously, and announcing it was offering markets US$ 500 million. Read full article

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  • chronic

    How far is 50?

    Christmas?

    Aug 15th, 2018 - 03:48 pm - Link - Report abuse -1
  • Enrique Massot

    “Argentine Peso stabilizes, country risk falls and stock market rebounds”

    Such an optimistic headline could be warranted if Argentina had tools to fight its quick sliding towards a memorable payments' crisis.

    At this moment, however, the country has zero tools to slow down speculative movements, after all regulations controlling incoming and outgoing capitals were dismantled.

    Ah, the virtues of the free market!

    Aug 16th, 2018 - 02:52 am - Link - Report abuse -2
  • Zaphod Beeblebrox

    Reekio,

    “At this moment, however, the country has zero tools to slow down speculative movements, after all regulations controlling incoming and outgoing capitals were dismantled.”

    Just curious, what tools does it need?

    “Ah, the virtues of the free market!”

    Yes, it can be a rollercoaster ride but there is a swings and roundabouts effect that can even out the fluctuations somewhat.

    High interest rates = Bad for your loans and credit cards, good for your savings.
    Low interest rates = Good for your loans and credit cards, bad for your savings.
    High currency value = Bad for exports, good for imports.
    Low currency value = Good for exports, bad for imports.
    Etc.

    So you've got to hope that Argentina will settle down to a balanced system that works out best for most and the free market should cause some of these factors to be self-correcting. However, some management may also be required and you are claiming that Argentina has “zero tools” to do that. And yet, the MP article says the central bank made some changes that improved things. Sounds to me like they did indeed have at least one tool and they used it to good effect!

    Only in Reekieland does good news = bad news.

    Aug 16th, 2018 - 06:03 pm - Link - Report abuse +1
  • Enrique Massot

    “...the central bank made some changes that improved things. Sounds to me like they did indeed have at least one tool and they used it to good effect!”

    ZB: I can sense how badly you want president Mauricio Macri to succeed.

    Believe me, independently of ideology, I also wish Macri - or anybody else for that matter - had taken Argentina on a path of growth and prosperity. There is too much human suffering at stake for me to wish differently.

    However, based on independent analysis and past experience, it was clear to me from the get go that Macri and his team did not have what's required to make Argentina succeed. As a result, I was an early critic of the man, his team, and his actions.

    I would encourage you to scan different sources of information and opinion. Too much is at stake.

    Aug 16th, 2018 - 09:03 pm - Link - Report abuse -1
  • bushpilot

    What then is required to make Argentina succeed?

    Based on your independent analysis and past experience.

    Aug 17th, 2018 - 02:24 pm - Link - Report abuse 0
  • Zaphod Beeblebrox

    BP,

    Reekie answered this in a previous thread:
    ”I would do exactly the opposite of what Macri has done-point by point.
    1) raise the GDP: Stimulate the domestic sector-production and consumption must increase. You need to curtail the absolute freedom of capitals to come and go as they please. Put an end to capital flight, tax luxury items, reinstate meaningful export taxes, stop bleed of dollars due to excessive tourism abroad.
    2) increase gainful employment: Again. Priority must be given to the domestic sector. Only local consumption will make a dynamic economy that is self-sustaining and does not depend on foreign decisions. Argentina must be an independent country once for all.
    3) tame inflation down to 9%: Taming inflation is important but not the first priority. Macri claimed inflation was the “easiest thing” for a government to do and look where he is. Inflation will go down once you have a healthy economy.
    4) stabilize the peso: Again, you need a strong domestic economy to give value to the local currency. End the current party that sees short-term capitals coming, making a buck and then taking off.
    5) increase production of basics like food and oil: Of course, you can't even begin to heal the Argentine economy if you sabotage it as Macri has consistently been doing for almost three years. Stop importing stupid things such as porc and oranges that are killing our regional economies. Trade must be on items we can't produce locally.
    6) give all Argentines secure, independent futures for themselves: Why, this would be a valuable goal. The first thing that is needed is to want to do it. If the government has contempt for Argentines as the current one does, the results are what we see. Put Argentines in the driver's seat. Allow the scientists, the technicians, the artists and the workers to thrive and they'll work wonders. Make it in such a way we get back our lost brainpower. Progress will ensue.”

    Reekie,

    You criticise Macri for EVERYTHING, even the good bits.

    Aug 17th, 2018 - 05:03 pm - Link - Report abuse -1
  • Enrique Massot

    @BP

    “What then is required to make Argentina succeed?”

    Thank you for your question. What Argentina most urgently needs is to rebuild itself as an independent country, free of neo-colonial ties. To do that, the country needs to reign on its backward oligarchic class, whose own project is to keep exporting agri-food commodities and no much else.

    We need to foster a thriving, progressive, forward-looking business community whose own success is linked to the country's success. This cannot be achieved without significant investments in R&D to put Argentina where it must be in relation to the world. We have a gold mine in scientists and researchers and cannot afford losing them to developed countries.

    There is much more of course, but a key point, as I noted, is to free Argentina from the remnants of our colonial past, becoming a country proud of itself that negotiates but does not beg anyone.

    Value workers -- give them respect, appropriate wages and training opportunities. Foster regional economies. Develop support for non-traditional exports.

    Aug 18th, 2018 - 09:51 pm - Link - Report abuse -1
  • Cheshire_Cat

    The challenge of Argentina is cutting expenditures and taxes to sustainable levels so as to cut high levels of foreign indebtness and attract much needed foreign investment, but in the process the State must not neglect to invest in education, infraestructure and R&D (for once we agree on a little something EM - R&D is important!). That should already be challenging enough, but with the Senate controlled by the Peronists and the usual union mobsters eager for blood this will be twice the challenge. Larger cuts in expenditure should have come earlier, now entering an electoral year it will be much more difficult. At least many Argentines seem to recognize the challenge and problems this time around - The financial literacy of our society seems to be improving.

    Aug 19th, 2018 - 03:47 am - Link - Report abuse +1
  • Enrique Massot

    CC seems to believe this is just business as usual in Argentina and that a few corrections will do it.

    ”The challenge (is) to cut high levels of foreign indebtedness and attract much needed foreign investment...“

    Come on, CC! Which country do you live in? If you resided in Argentina for the last three years you would know that president Macri promised ”una lluvia de inversiones“ from the get go, when the country's foreign debt at the end of the CFK government was still at reasonable and manageable levels.

    If you had been paying attention you would know that all Macri has been doing during his first three years in office is to take debt like there was no tomorrow - just to keep the lights on. How on earth is Macri going to ”cut foreign indebtedness“ now that he is up to his ears?

    ”...many Argentines seem to recognize the challenge and problems...financial literacy of our society seems to be improving.“

    Again. Which country do you live in, CC?

    Let's see IPSOS' opinion poll of Aug. 17:

    Consumer confidence April: 47.6 per cent
    Consumer confidence July: 38.6 per cent

    What IPSOS think of it?

    ”The confidence index comes back to 2014 values, the lowest levels experienced by the CFK government. In both cases, the confidence drop happens in a year prior to a presidential election.”

    And we ain't seen nothing yet.

    Aug 19th, 2018 - 06:07 am - Link - Report abuse -1
  • Zaphod Beeblebrox

    Reekie,

    “We need to foster a thriving, progressive, forward-looking business community whose own success is linked to the country's success. This cannot be achieved without significant investments in R&D to put Argentina where it must be in relation to the world. We have a gold mine in scientists and researchers and cannot afford losing them to developed countries.”

    I agree. Investment in R&D gets repaid many times (on balance) but it takes time so you need a longer term view than most politicians. Scientists are now in high demand and every country says that they are welcome (even if other groups are not). The great thing about being in high demand is that you afford to be selective and Argentina needs to recognise that it needs to be able to provide an attractive environment for scientists if it wants to be competitive on the international market -it isn't just about the money, it is facilities, security, health care, reputation etc. So Argentina needs to invest in its university research, science parks, support for industrial R&D etc. if it wants to be competitive in this respect. In the USA and UK, companies get tax relief on R&D costs, is the same true in Argentina?

    Aug 21st, 2018 - 05:23 pm - Link - Report abuse 0

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