Peso posts sharpest weekly fall since Milei took office

[Blockchain]

I agree with you Larry that Trump and the USA won't end up giving Argentina anything. Just cheap talk to boost the peso.

Does anyone really believe the peso is worth what it is? Just saw on Bloomberg they are saying the peso is 30% overvalued.

Milei’s Peso Is 20% Overvalued and Fragile, Analysts Say

One of the biggest problems Argentine President Javier Milei has as he tries to stem a currency crisis is that the peso, by nearly all accounts, is overvalued.

www.bloomberg.com

 

[GlasgowJohn]

@ElQueso , thanks for posting both articles

 

[Blockchain]

He got bazooka from this article in the Economist. Saw it used there.

https://archive.ph/7nBo7

Great read. Thanks for sharing.

 

[GlasgowJohn]

But I don't think the USA will give any money in the end. Trump just said he doesn't think Milei should get a bailout. In time, the peso will go back to what is should be valued. The US is just trying to improve things before the mid-term elections but I don't think Trump even knows that Milei is not running next month. He has no clue about Milei.

Milei may not be running but his credibility certainly is.

The bail out from the USA gives him some breathing space and stability for the peso.

A good result will bring us two years of agressive Milei anarcho capitalism

A bad result and Milei will be on his own and the peso up to 2,000

But Milei needs to get his strategy right - he messed up badly in the Bs As provinical election . Can he get it right this time?

 

[Bingo]

Milei may not be running but his credibility certainly is.

The bail out from the USA gives him some breathing space and stability for the peso.

A good result will bring us two years of agressive Milei anarcho capitalism

A bad result and Milei will be on his own and the peso up to 2,000

But Milei needs to get his strategy right - he messed up badly in the Bs As provinical election . Can he get it right this time?

It seems like 2000 pesos to $1 USD is about what it should be. Trump hinted that he didn't think Milei needed a bailout. It will be interesting to see how things sway before the elections next month. Milei doesn't have good judgment keeping his sister.

 

[Bobb]

The thing is, everyone’s expecting a collapse, and that expectation alone ends up speeding it up. It’s like a self-fulfilling prophecy: the more people talk about the peso hitting 2000 per dollar, the more they rush to cover themselves, and that just pushes the rate up even faster.

 

[Finance Prof]

It seems like 2000 pesos to $1 USD is about what it should be. Trump hinted that he didn't think Milei needed a bailout. It will be interesting to see how things sway before the elections next month. Milei doesn't have good judgment keeping his sister.

No one knows what the real value is. Once people panic you never know what it would be at. Look at how much it is jumping up. I got almost 1550 to $1 the other day. Now it has sunk with the US backed support.

 

[CraigM]

It seems like the US's words are just delaying the inevitable which is the peso cratering. They are trying to contain it before the elections but everyone knows it's way over valued. This from Bloomberg says it is as much as 30% overvalued.

https://archive.ph/jKqvB

They may well be right and from all accounts here the peso is overvalued, but currencies can remain that way for years. Valuation tells you nothing about what's going to happen to a currency near term, it's all about flows. Right now the US is pledging support and anyone shorting the peso covered or is trying to cover, so all those flows went the other direction. I have no idea what is going to happen to the peso this year but neither does anybody else. That said, if someone with a crystal ball can tell me what is going to happen in the elections next month...

 

[Finance Prof]

They may well be right and from all accounts here the peso is overvalued, but currencies can remain that way for years. Valuation tells you nothing about what's going to happen to a currency near term, it's all about flows. Right now the US is pledging support and anyone shorting the peso covered or is trying to cover, so all those flows went the other direction. I have no idea what is going to happen to the peso this year but neither does anybody else. That said, if someone with a crystal ball can tell me what is going to happen in the elections next month...

Correct. So many were shorting and piling on but with the US government pledging support, even if they don't people are scared that they could which could keep them in check.

It is difficult to predict what will happen in the elections. The polling was way off last elections and in the Presidential elections. Very few people called it correctly.

 

[TonyTigre]

Perhaps the recent drop in the peso and then the reversal after the US pledging support is a reminder to the Argentinians who wavered in their support of Milei what is at stake here. They better choose wisely for what is best for them (which is not necessarily best for the expats here) in the coming election or everything Milei has done so far would be reversed and the peso will collapse, bringing about the hyperinflation that was stopped by Milei. If they don't choose wisely, then we all won't have to feel so guilty about taking advantage of the Blue dollar rates again like a couple of years ago.

 

[Betsy Ross]

They may well be right and from all accounts here the peso is overvalued, but currencies can remain that way for years. Valuation tells you nothing about what's going to happen to a currency near term, it's all about flows. Right now the US is pledging support and anyone shorting the peso covered or is trying to cover, so all those flows went the other direction. I have no idea what is going to happen to the peso this year but neither does anybody else. That said, if someone with a crystal ball can tell me what is going to happen in the elections next month...

The peso and the dollar were artificially tied unrealistically for 10 years+ here back in the 1990's. Of course things crashed but Craig makes a good point that currencies can stay unrealistic for many years. Argentina is a nutso country and things can change at the drop of a dime here. The only thing certain about Argentina is uncertainty.

 

[Radd]

Looks like there’s a bit of breathing room for now: with the dollar and country risk coming down, the government has gained some calm heading into the elections. The fact that the Central Bank has stopped losing reserves helps ease nerves a bit, but investors are still watching closely for the results on October 26. In the end, everything will depend on how the ruling party does, so the next few weeks are going to be key.

Con el dólar y el riesgo país en baja, el Gobierno ganó tranquilidad para llegar a las elecciones legislativas sin mayores sobresaltos

El Banco Central dejó de perder reservas y se alejan los escenarios apocalípticos para las próximas semanas. Pero los inversores siguen pendientes del resultado que pueda obtener el oficialismo el 26 de octubre

www.infobae.com

 

[Wally]

Looks like there’s a bit of breathing room for now: with the dollar and country risk coming down, the government has gained some calm heading into the elections. The fact that the Central Bank has stopped losing reserves helps ease nerves a bit, but investors are still watching closely for the results on October 26. In the end, everything will depend on how the ruling party does, so the next few weeks are going to be key.

Con el dólar y el riesgo país en baja, el Gobierno ganó tranquilidad para llegar a las elecciones legislativas sin mayores sobresaltos

El Banco Central dejó de perder reservas y se alejan los escenarios apocalípticos para las próximas semanas. Pero los inversores siguen pendientes del resultado que pueda obtener el oficialismo el 26 de octubre

www.infobae.com

Let's see what happens. The USA's help was a big deal. The Central Bank reserves continues to go down every day. I check out Buysellba's X posts and it is posted daily and they just keep falling.

https://x.com/BuySellBA

Perhaps the recent drop in the peso and then the reversal after the US pledging support is a reminder to the Argentinians who wavered in their support of Milei what is at stake here. They better choose wisely for what is best for them (which is not necessarily best for the expats here) in the coming election or everything Milei has done so far would be reversed and the peso will collapse, bringing about the hyperinflation that was stopped by Milei. If they don't choose wisely, then we all won't have to feel so guilty about taking advantage of the Blue dollar rates again like a couple of years ago.

Totally agree what is best for expats and what is best for locals are two separate things. I have a lot of family here so I am usually rooting for local conditions to improve but all of our savings and income is in dollars so there is that too. I never feel guilty about whatever locals conditions are. They are what they are not caused by anything we are doing. Government and local forces at play.

 

[kenobi]

Interestingly, even though locals know our choices don’t directly affect them, it often doesn’t make them happy to see that we have access to things they don’t. Palermo, for example, is full of tourists and expats renting or buying properties, and in Patagonia it’s even more obvious with so many foreign owners.

Accessing housing here is incredibly difficult for those who have lived in Argentina their whole lives, which is why most people end up renting. It’s no one’s fault in particular, but it highlights a structural problem: while some can take advantage of opportunities because they’re from abroad or have dollars, locals feel the system is unfair. It’s a reminder that, even if we don’t directly impact the local economy, our presence and resources can influence perceptions and create tension.

 

[Betsy Ross]

Interestingly, even though locals know our choices don’t directly affect them, it often doesn’t make them happy to see that we have access to things they don’t. Palermo, for example, is full of tourists and expats renting or buying properties, and in Patagonia it’s even more obvious with so many foreign owners.

Accessing housing here is incredibly difficult for those who have lived in Argentina their whole lives, which is why most people end up renting. It’s no one’s fault in particular, but it highlights a structural problem: while some can take advantage of opportunities because they’re from abroad or have dollars, locals feel the system is unfair. It’s a reminder that, even if we don’t directly impact the local economy, our presence and resources can influence perceptions and create tension.

Obviously some locals will be resentful but by and large most locals appreciate tourism. Palermo is mostly locals not tourists. It is a wealthy neighborhood. The difficulty of having to save all the cash to buy makes it tough but it is good to see mortgages here making up more and more sales today. Credit and mortgages will have more to do with more locals being able to purchase in the future.

 

[noname]

I think both points are valid. It’s true that foreign buyers and expats can create perceptions of unfairness, especially when locals struggle to access housing. But as mentioned, Palermo is largely a wealthy, established neighborhood, and tourism does bring benefits to many people and businesses. The bigger structural issue is access to credit, as mortgages and financing options improve, more locals will actually have the opportunity to buy property themselves. So while some resentment is inevitable, the long-term trend with better financing could reduce tension and make the market more inclusive.