Argentina Proclaims Peso Devaluation "Obviously Won't Happen" - Just Like It "Vowed" In 2013
May 2013, President Kirchner: "As long as I'm president, those who want to make money through devaluations, which other people have to pay for, will have to keep waiting for another government,"
Jan 2014: Argentina Devaluation Sends Currency Tumbling Most in 12 Years
Aug 2014: Argentina’s Cabinet Chief Jorge Capitanich said today a devaluation of the peso, "obviously won't happen."
So what's next?
From May 2013: Argentine President Cristina Kirchner vowed not to devalue the country's currency for the remainder of her term because she said doing so would hurt most Argentines.
In a nationally televised speech, Mrs. Kirchner addressed widespread criticism of her economic policies and said that anyone who wants to see the currency devalued will have to wait until someone else becomes president."As long as I'm president, those who want to make money through devaluations, which other people have to pay for, will have to keep waiting for another government," she said.The comments came amid intense speculation that the government planned to announce some kind of new policy aimed at restoring confidence in the peso.Economists say the growing gap between the black-market exchange rate and the official rate is spooking investors and leading people and companies to delay investment plans. But government officials such as Vice President Amado Boudou have downplayed such comments."People really exaggerate the informal dollar," said a comment posted on Mr. Boudou Twitter account. "This is a very speculative, marginal issue that involves very few Argentines."
Jan 2014: Argentina Devaluation Sends Currency Tumbling Most in 12 Years
Argentina devalued the peso the most in 12 years after the central bank scaled back its intervention in a bid to preserve international reserves that have fallen to a seven-year low.The peso has plunged 12.7 percent over the last two days to 7.8825 per dollar at 3:45 p.m. in Buenos Aires, after falling to as low as 8.2435, according to data compiled by Bloomberg. The decline in the peso marks a policy turn for Argentina, which had been selling dollars in the market to manage the foreign-exchange rate since abandoning a one-to-one peg with the U.S. dollar in 2002.
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And now... (via Bloomberg)
Argentina’s Cabinet Chief Jorge Capitanich said today opposition groups are promoting a devaluation of the peso, “which obviously won’t happen.”So-called vulture funds, or holders of defaulted bonds suing for repayment, and traders in the illegal currency market are causing the peso to weaken by supporting economic and media groups: Capitanich“They generate speculative attacks to promote devaluation of the peso,” Capitanich said“It’s a permanent strategy of the vulture funds, for which they have the participation of the local vultures”
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It appears the market disagrees...
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“We are in the worst of worlds. Devaluation is a fact of market and evidence of President Cristina Fernandez administration’s failure, which insists in not accepting it”, said Lavagna who was the architect for the taking off of the Argentine economy in 2003 following the collapse and major default of 2001/02.“The market has already adopted and adapted to the devaluation of the Peso, so it seems out of touch with reality to keep the artificial official rate, which is well below the level of daily operations by the different economic actors”, added Lavagna.“The Argentine economy is in the process of rapid deterioration; inflation was born out of the printing of money with no reserves; investment is scarce and so is the creation of jobs, plus the energy situation has become most complicated”, warned the former minister who was the brain behind the Argentine sovereign debt restructuring.He added that the government of President Cristina Fernandez “locks itself in its small wonderland out of touch with the real world, and thus can’t find the way out according to their mental scheme”. The majority of Argentines will end paying the tough adjustment plan, so “we need to build an integral plan to create a sustained growth system”.
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Seems like nothing has changed...
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