This week three other new dollar exchange rates were announced in the country, adding a total of fourteen. Experts criticize that these measures can increase inflation and the proliferation of irregular markets.
“I’m already lost, I don’t know how many dollars there are,” said yesterday the head of the Government of the City of Buenos Aires, Horacio Rodriguez Larreta, in declarations to the press, in the capital of Argentina.
And it is that this week the Minister of Economy of the government of President Alberto Fernández, Serge Massa, announced three new dollar exchange rates, adding a total of fourteen in the country.
The latest US currency exchange rate differentials were the “Qatar” dollar, the “luxury dollar” and the “Coldplay” dollar or “culture dollar”.
The first, which arises because of Argentina’s participation in the World Cup in Qatar, applies to those who spend more than 300 dollars a month with credit and debit cards.
The second, has the objective that those who buy “luxury” goods abroad, whether they are vehicles, private jets, watches, among others, the dollar will be fixed at 302 Argentine pesos (about 1.98 euros).
And, finally, and the one that has attracted the most attention due to its name, the “Coldplay dollar”, is aimed at the field of culture, and will make hiring artists abroad more expensive, with a dollar price of 204 Argentine pesos. (1.38 euros).
The list is long and also includes the following types of dollar: blue, tourist, future, stock, savings, crypto, Netflix, SENEBI, and the most recent: “techno dollar” and “soy dollar”.
Deutsche Welle spoke with two financial experts to understand why Argentina is one of the few countries that uses this type of system.
Few reserves in the Argentine Central Bank
These restrictions would be explained by the current economic scenario of the country.
For example, in Argentina it is almost impossible to access the official dollar, determined by the Central Bank, because the reserves in that institution are momentarily low due to lack of investment.
Likewise, there is a commitment of the Latin American country with the International Monetary Fund (IMF) to increase its reserves at the end of this year, for which the government has further limited the circulation of the US currency.
Faced with this scenario of scarcity, the Executive Power made the decision to negotiate sector by sector.
“So what is happening today in Argentina is that there is a lot of lobbying. And the Central Bank, instead of correcting with a general, normal price that responds to the market evaluation, begins to grant specific prices for the dollar, depending on the sector”, says Marcelo Elizondo, president of the International Chamber of Commerce (ICC). in Argentina.
“This generates a lot of distortion, a lot of instability and little predictability, because nobody knows how much their exchange rate is going to be worth in the future,” he added.
Another problem with this type of system, Elizondo points out, is that it discourages international trade and investment.
According to the expert, “these measures are something very peculiar and not replicable, which generates a lot of confusion. And the result is not good, because in the end it makes everything depend on the criteria of a public official, and not on the productive criteria of the companies. And for foreigners it is something very confusing and discourages the operations of companies.
In this sense, the economist from Carta Financiera adds that, with the current mechanism imposed by the Fernández government, “dollars only come out, and do not come in, and the great risk is that the Central Bank will be left with nothing in its reserves. Everything, because of these types of restrictions.”
Another problem, both analysts agree, is the proliferation of irregular markets for the purchase and sale of dollars in the country, due to the difficulties in accessing the currency.
The most worrying thing, they point out, is that they operate freely within the framework of illegality.
“What is happening is that if people want to buy dollars, they have to do it in a parallel market, which is a peculiar market. Some buy public titles to sell them in dollars. Others get them through black markets, few formal, with a market price that is more expensive than the price that the Central Bank has, “says the president of ICC in Argentina.
Dollars in Argentina
Miguel Boggiano explains that, currently, import companies have also been created that in practice do not import consumer goods or any other service.
However, they manage to get the Central Bank to sell them dollars close to 150 Argentine pesos, to later resell them in other markets at 250.
The value of the dollar is also a sign of the economic stability that countries have, so its devaluation can contribute to increased inflation, because the exchange rate influences prices.
A worrying situation, considering that the year-on-year inflation in Argentina is one of the highest in the world, over 80%, according to the Consumer Price Index (CPI) of that country.
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