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New car sales balloon and housing market stalls with Argentina’s “clamped dollar”

Tuesday, June 5th 2012 - 07:58 UTC
Full article 25 comments
Record sales in May as hoarded dollars turned into new cars  Record sales in May as hoarded dollars turned into new cars

Trading in the Argentine money exchange market on Monday was relatively calm with very few operations in the so called ‘blue’ or ‘parallel’ dollar but with none of the expectations announced by members from President Cristina Fernandez administration.

However the impact of the money exchange trading turbulence was clearly appreciated in other areas of the economy such as the stock exchange, the sale of cars and in the real estate industry.

The official dollar price traded at a stable 4.47 and 4.49 Pesos compared to last Friday while the ‘blue dollar’, in spite of Senator and former cabinet chief Anibal Fernandez predictions, was far from sliding to 5.10 as he anticipated on Sunday, (albeit far from 5.95 Pesos) and traded between 5.60 and 5.85 Pesos with no clear tendency because of the very few operations.

“Today the market seems to have frozen. As trading slows the tendency is for the value of the US dollar to slide downwards and this is the prospect for coming days”, anticipated a foreign money dealer in Buenos Aires financial district.

The situation is considered similar to that of October last year and the beginning of November when to force the greenback price down the market was “dried”, which meant that the main operators ceased to trade for a few days forcing the dollar exchange price to drop.

At that time the ‘parallel’ dollar slid from 5 Pesos to 4.75 Pesos when the government’s request was to bring it down to 4.50 Pesos. It remained at that level for several months until the latest restrictions when it again climbed past the 6 Pesos.

As a consequence of government pressure and strict controls, even with dogs sniffing bills, the market currently has “more supply than demand” and the Argentine central bank managed a net purchase of 50 million dollars.

But the ‘dollar clamp’ had other effects on the Argentine economy.

To start with May proved to be the best month for the Buenos Aires stock exchange in a long time as frustrated buyers of foreign currency took to shares boosting trade and stock values.

Similarly with auto sales: dollar savings were converted into new cars with the highest level of registry so far this year and 11.5% above the same month a year ago. A total of 75.824 new units were registered, which also represents 25% over the 60.836 of last April.

In the first five months of 2012 the total number of new car sales in Argentina jumped to 389.909 units or 7% more than the 365.246 of the same period last year, according to Argentina’s car dealers association.

But on the other hand house sales in the capital Buenos Aires during April dropped 25% compared to a year ago according to the Chartered Notaries College.

Although ten percentage points can be attributed to fewer working days in April (Holy week), the rest is attributed to the fact that most housing transactions in Argentina are done in US dollars and with restrictions, sales stalled.

The total number of registered sales in April in Buenos Aires City was 3.554 which is equivalent to a drop of 17% compared to April 2011.

Meanwhile is was reported that a Customs dog named “Kiki” became last Friday’s hero when he sniffed two people carrying 135.000 Argentine Pesos which presumably they were planning to exchange for dollars in a neighbouring town across the border with Bolivia.


Categories: Economy, Politics, Argentina.

Top Comments

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  • Think

    Article says.....:
    “Meanwhile is was reported that a Customs dog named “Kiki” became last Friday’s hero ”

    I say...:

    What beautiful dogs....
    An unique Argentinean breed...: Recuperador Dorado (de dolares :-)

    An extra DentaStix for Kiki and friends!

    Jun 05th, 2012 - 09:02 am 0
  • British_Kirchnerist

    Viva Kiki! A nice heartwarming animal story =)

    Jun 05th, 2012 - 11:23 am 0
  • yankeeboy

    In the hearts of every RG Peronista they want a Police state to control their lives so it relives them from critical thinking and most decision making.
    Soft brains are easier to control so it works out for both parties. As evidenced by our thoughtful RG posters.

    Jun 05th, 2012 - 11:23 am 0
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