So as you probably already know, the dollar blue has been floating around the ARS 14-15:1 range ever since Alejandro Vanoli replaced Juan Carlos Fabrega as president of Argentina’s central bank, the BCRA. And yes, even though Fabrega’s only educational attainment is a high school diploma, he was relatively well-regarded and kept Kicillof’s heterodox tendencies in check.
Alejandro Vanolli is man who has compared publicly posting the dólar blue’s price (today you could have purchased ARS 14.67 per dollar…whoops) to posting to price of cocaine (which isn’t illegal; here’s an even more self-proclaimed explicit piece from The Economist if you’re interested). And contrary to his predecesor, Mr. Vanoli is seen as another pro-CFK puppet. In recent days he has cracked down on the dólar blue. For the record. the dólar blue is the same as the “parallel market”, the “black market”, the “unofficial rate”, the “blue dollar”, and in Jorge Capitanich/the government’s eyes, “un mercado ilegal” or an illegal market.
This “crackdown” has translated in effect to the temporary closure of cuevas or those informal currency exchanges that often front as stores that buy gold, as well as restrictions on “contado con liqui” or the legal practice of purchasing dollar-denominated bonds locally in pesos and selling them in the United States for dollars, and vice versa. More on that at a later date. Combined, these acts of “financial repression” have reduced the dólar blue’s price relative to the U.S. dollar, despite what in most markets would translate into a scarcity premium.
Nonetheless, fear not. These prohibitive measures, which includes the continued selling of BCRA dollar reserves which are nearing an eight year low and stand at about US $27.5 billion – which, I remind you, renders Argentina insolvent were all of its foreign debt obligations to become due all at once – are unsustainable. Selling dollars increasingly deteriorates Argentina’s financial position for a number of reasons, and at some point the peso will depreciate/devalue rapidly. Most think this will happen in January 2015 at the latest.
My advice? The blue will rise again soon. There will be Quinceañeras galore in Buenos Aires (I’ve actually never been to one so feel free to invite me). Live on the 10 peso diet for a while. Yes, meaning a budget of 10 pesos per day which the government claims is sufficient to enjoy a nutritious, well-balanced diet. Okay maybe they didn’t say well-balanced, or nutritious, but perhaps they should have if they want what is best for la gente…achieving the best possible outcomes is or should be the goal of every government, no?