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Being the (Sir Edmund) Hillary of South America
takes a toll on a girl. Cristina Fernandez de Kirchner
did have a brain health issue last year. She was out of
circulation for about five weeks until appearing in public
in mid-January finally. She and her government have
succeeded, by in large, in destroying the financial system
of Argentina, along with the peso, in the quest of establishing
"Income Equality". Leftism brings depravity and ruin.
Always.
(the upper labelling of the photos states, "Argentina remains aware of the health of its President.") |
SOURCE: REUTERS
27 January 2014
UPDATE 4-Argentina's peso slides on first day of new currency rules
By Brad Haynes and Hugh Bronstein
BUENOS AIRES, Jan 27 (Reuters) - Argentina set monthly
limits on dollar purchases on Monday, widening the gap between
the official and parallel exchange rates with an erratic
currency policy that has battered the peso and rattled global
financial markets.
By limiting the purchases of U.S. dollars to a fifth of a
worker's monthly wages, the government revived doubts about its
commitment to a more open currency market under measures
announced on Friday.
The concerns circling the peso, which posted its biggest
daily drop in a decade last week, added to fears of an
emerging-market sell off hitting currencies from the Turkish lira
to the Polish zloty.
Argentina's ostracism from international credit markets
since a 2002 debt default has limited the risks to the global
financial system. However, the plunging peso could hurt trade
with neighbours such as Brazil, whose currency closed at a
five-month low on Monday.
Argentina's central bank stabilised the official peso by
pumping $100 million of its waning reserves into the interbank
market. But private traders wary of the government restrictions
weakened the peso nearly 4 percent in parallel trading.
Due to excess demand for dollars, the peso trades on the
parallel black market at a discount of more than 40 percent to
the tightly controlled official exchange rate.
"This is a relief, but it is not freedom. In practise, it
gives just a little escape," said economist Rodolfo Rossi in
Buenos Aires. "The pressure on the (black-market peso) is going
to continue."
The local currency weakened on the black market to
12.15 pesos per U.S. dollar, while the official exchange rate
was unchanged at 8 per dollar in thin trading. Last
week, the official peso slid nearly 20 percent as investors
scrambled to make sense of the new currency regime.
The rapid depreciation has raised credit risks for Argentine
banks, insurers and companies with foreign debts, analysts from
Moody's Investors Service warned in a research note to
investors.
"It remains unclear what policies the government plans to
pursue to address the underlying causes of capital flight, curb
inflation and restore investor confidence," the ratings agency
said in a statement. "Hence, Argentina's credit quality will
likely continue to face negative pressure."
Moody's forecast a further 50 percent devaluation of the
peso by the end of the year, with price pressures from imports
pushing inflation upward to over 30 percent in 2014, from what
is already one of the world's highest inflation rates.
Argentine officials were quick to dismiss such risks.
"There is no reason that the exchange rate should distort
consumer prices," said Cabinet Chief Jorge Capitanich in a press
conference detailing the new regulations. "Lots of businesses
just raise their prices out of uncertainty."
Shopkeepers over the weekend hurriedly replaced price tags
on imported items, from Cuban cigars to Asian televisions.
The price surge followed the government's decision to lift
two-year-old restrictions on Argentines buying foreign currency,
allowing savers access to coveted U.S. dollars.
The relaxation of controls came as the central bank's
foreign exchange reserves dipped under $30 billion - a level
suggesting its interventions in support of the anaemic peso had
become unsustainable.
Allowing average wage-earners to access U.S. dollars should
pressure reserves as well, because the central bank is the
economy's main source of foreign exchange.
Conditioned by previous financial crises to hold savings in
dollars, Argentines are obsessed with the greenback. The
currency controls regime ending on Monday forced many people to
go to the black market for dollars to protect against the weak
peso and fast-rising consumer prices.
INFLATION RISKS
Consumer prices rose about 25 percent in 2013, according to
private analyst estimates. Official data, which many economists
dispute, clocks inflation at less than half that rate. A new
government consumer price index, ordered by the International
Monetary Fund, is expected to be unveiled next month.
While inflationary, President Cristina Fernandez's policies
were seen by most voters as the key to economic recovery from
the 2002 debacle. She easily won re-election in 2011, promising
deeper market interventions and more stimulus spending
unencumbered by inflation targeting.
The effect of peso volatility on other countries' markets
should be limited by the fact that Argentina has been unable to
issue international bonds since its 2002 sovereign default.
Since then, the government's unorthodox policies -
underscored by its 2012 seizure of energy company YPF
- have kept all but the most risk-hungry investors at bay.
The peso's recent slide added to risk aversion in global
financial markets, but foreign officials played down concerns.
"The troubles in Argentina today find a European Union that
is much more solid and a euro that is much more solid and a
better ability to deal with this kind of concern," Italian Prime
Minister Enrico Letta told journalists on Monday.
Consumer prices remain a big worry on the streets of
Argentina, but the issue has not sparked mass protests lately.
Tensions may rise in the coming weeks as labour unions demand
that pay increase in line with private inflation estimates.
If Argentina suffers 30 percent inflation this year, as
private analysts expect, it would mark the fastest rate since
the 2002 crisis, when inflation reached 41 percent.
Fernandez has mentioned neither consumer prices nor the
peso's plight in recent speeches, leaving her cabinet to
announce policy changes. The next presidential election is in
2015, with Fernandez constitutionally barred from a third term.
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| What? No selfie? |
Cristina was also threatening to re-declare war on the Brits, and/or to establish a diplomatic boycott of the Old Empire. That measure met with similar success. The Falkland Island issue always serves to whip up war fervour among the Argentine people for at least 22 minutes.
There are so many parallels between the promises and accomplishments of Obama and this horrid demagogue princess that it is almost as if they are twins separated at birth, born under the same star, and....thankfully, both term limited out during the 2015 to 2016 period....we hope.
More later. Thank you all for the time you invest in this screed.
El Gringo Viejo
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