Your Front Row Seat To Argentina's (Latest) Currency Collapse

Tyler Durden's picture

UPDATE: The Argentine Trade Balance missed surplus expectations by the most in 3 years (and 2nd most on record).


As those who follow Zero Hedge on twitter know, we have recently shown a keen interest in the collapse of the Argentine currency reserves - most recently at $29.4 billion - which have been declining at a steady pace of $100 million per day over the past week, as the central bank desperately struggles to keep its currency stable. Actually, make that struggled. Here is what we said just yesterday:

As of today it is not just the collapse in the Latin American country's reserves, but its entire currency, when this morning we woke to learn that the Argentina Peso (with the accurate identifier ARS), had its biggest one day collapse since the 2002 financial crisis, after the central bank stopped intervening in currency markets. The reason: precisely to offset the countdown we had started several days back, namely "an effort to preserve foreign exchange reserves that have fallen by almost a third over the last year" as FT reported.

As the chart below shows, the official exchange rate cratered by over 17% when the USDARS soared from 6.8 to somewhere north of 8.

But as most readers know, just like in Venezuela, where the official exchange rate is anywhere between 6.40 and 11, and the unofficial is 78.85, so in Argentina the real transactions occur on the black market, where they track the so-called Dolar Blue, which as of this writing just hit an all time high of 12.90 and rising fast.

What happens next? Nothing good. "The risk of capital flight is rising by the minute. This will be very hard to control,” wrote Dirk Willer, strategist at Citigroup, adding that liquidity had "largely disappeared" with a risk of Venezuela-style capital controls. Ah Venezuela - that socialist paradise with a soaring stock market... even if food or toilet paper are about to become a thing of the past.

Some other perspectives via the FT:

Siobhan Morden of Jeffries said: “This is not an administration that respects or understands market pressure. They have been in the early stages of currency crisis since December, and yet their main strategy has been to pay off arrears and try to attract foreign direct investment.”


Luis Secco, Buenos Aires economist, said "It is hard to figure out what is the logic behind the authourities decision to let the peso so abruptly, without any other accompanying macroeconomic policy. It’s possible that the authorities would rather see a strong rise in the dollar, than lose, again, a large quantity of reserves."


It is a potentially dangerous situation...not least because it could give the impression that the authorities don’t have a very clear idea of how to manage the situation.”


Ricardo Delgado, Buenos Aires economist, said on Wednesday: “The government faces a dilemma. It wants to stop reserves from falling. But that means less imports and thus lower growth, as the economy is very dependent on imports. So the question is: do you want more growth, or higher foreign reserves.“

However, with the "currency run" having once again begun, absent a wholesale bailout and/or backstop by "solvent" central banks of Argentina, a country which has hardly been on good speaking terms with the western central banks, there is little that the nation can do.

So for all those morbidly curious individuals who are curious what the slow-motion train wrecked death of yet another currency will look like, below is a link to the DolarBlue website, aka the front row seats where the true level of the Argentina currency can be seen in real time. If and when this number takes off parabolically, that's when the panic really begins - first in Argentina, then elsewhere.


Of course, it's not just Argentina - most of the world's emerging market FX is getting hammered year-to-date...

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NoDebt's picture

Don't cry for me, Argentina.  Your FX reserves were all I ever wanted.

mmanvil74's picture

Nice to see Bitcoin listed right there below gold (oro). If they act soon, they can still get one bitcoin for less than an ounce of gold....

idea_hamster's picture

"It was the [invisible] hand of God!"

Herd Redirection Committee's picture

Oh, hey, what do you know, right after Argentina and Lesotho we have.... Canada!

Keep stacking, MFers (esp. those north of the 49th!)

CPL's picture

All the stuff floating at the banks in Canada is...ummm...questionable now.  Lots of tungsten weight in what's being sold if you catch my drift.  How you can tell that's happening?  The Canadian mint sells the $100 dollar silver coin and not much else.  So if you are buying, make sure to check the resistence of the product sold, it might not entirely be gold, silver or platnium.  It's to the point the pawn shops test before talking turkey now.

Meanwhile the banks are 'giving it away' at market price.  How likely is that?

CPL's picture

No, that happens when people are really bad at math and pretending that capital is infinite in a finite world.

fonestar's picture

That's correct mmanvil74.  Gold is very good as a local, historical store of value but Bitcoin simply beats it when it comes to transactional utility, speed and ease of payments.

JohnnyBriefcase's picture

...when you have access to electricity.

fonestar's picture

Who cares?  When was the last global power outage you can think of?

JohnnyBriefcase's picture

Well, Argentina is having crazy power outages at the moment. If your money is in bitcoin and your country doesn't have power then how do you access your money?

I'm a little confused by your lack of understanding here...

madtechnician's picture

smartphone , laptop , tablet , even a shitty old motorola phone can run a simple bitcoin app. you can charge these from a 10 buck solar panel or a car charger , I mean , this is not exactly rocket science right ?

HellFish's picture

You realize your little bitcoin app has to conncet to a network, right?

fonestar's picture

If the electrical co. shuts your country's power off, go to another country.

You guys should just stop trying to think, it hasn't been working out well for you.

drink or die's picture

Says the Canadian living in his mothers basement.

madtechnician's picture

So in your apocalyptic scenario is there any oxygen to breath or water to drink or is it just the electricity and phone / internet down ?

fonestar's picture

Oh, yeah?  All of Argentina's power is down?  LOL.  

How long will that last?  Probably indefinitely right?


Dumb.  Dumb.  Dumb.

JonNadler's picture

In Argentina? don't rule it out

cro_maat's picture

@ johnnybriefcase: I blew coffee on my keyboard with that one! I didn't think anyone was confused by fonestar the bitcoin troll extraordinaire. He has a script and he is sticking to it. Do not confuse him with facts. Do not tell him that in the future his local dairy farmer will give him a bemused look at best and the north end of a rifle at worst in response to his offer of digital fiat for a quart of milk. I just wish I could be there on that day when his bitcoin USB drive does not work and the world has moved on without him.

fonestar's picture

The Bitcoiners won't bother dealing with your "local dairy farm" face to face.  They will contact their people and have them buy the whole damn farm or run them off their land.

madtechnician's picture

Oh yeah when the Russian's finally invent that quantitative computer thingy everybody says will crack the bitcoin code.

eclectic syncretist's picture

By "ease of payments" are you referring to paying for things like rent, mortage, gas, and food, or do you consider these things non-essential trivialities?

rex-lacrymarum's picture

I have nothing against bitcoin, but this argument doesn't really make much sense. There are a number of digital payment services based on gold available (such as Turk's Goldmoney), which are in no way different in terms of 'transactional utility, spead and ease of payment' to use your wording. The main difference is that instead of bitcoins moving from one wallet to another, gold grams in a vault get reassigned from one account to another. 

Harbanger's picture

Gold sales have been banned in Argentina since 2012. Lose the Socialist bitch, Bitchez!

Edit- For the socialist diehards, Here's a link on the gold ban from Ferfal,

midtowng's picture

Starting to see a building emerging market crisis coming. If China gets into trouble it will be global.

eurogold's picture

Try finding Gold in any form now in Argentina to buy....good luck

youngman's picture

I think she passed a law that outlawed buying gold too...

CrashisOptimistic's picture

Gold is not important.  Oil is.

And this is what happens to a country that relies on it and then it runs short.  See YPF.

And soon, see the Bakken.

PrecipiceWatching's picture

Wish there was a practical way to stack petroleum.....

Harbanger's picture

If there were a way for you to stack petroleum to save yourself, she would have also banned it.  Like Maduro, she's a Socialist who knows what she's doing.

DOT's picture

@crash:  dead x 2  (Vaca Muerte, muerte)

JustObserving's picture

Meanwhile in India, if you had not converted your undeclared income into real estate or gold, you are plumb out of luck.  Good luck exchanging your undeclared old fiat notes for newer ones.  But, perhaps, you can still buy some gold and silver before the deadline even though they are at 15% to 20% premiums to international prices:

Reserve Bank to withdraw all pre-2005 currency notes from circulation

MUMBAI: The Reserve Bank on Wednesday decided to withdraw all currency notes issued prior to 2005, including Rs 500 and Rs 1,000 denominations, after March 31 in a move apparently aimed at curbing black money and fake currencies. 

"After March 31, 2014, it (RBI) will completely withdraw from circulation all bank notes issued prior to 2005. From April 1, 2014, the public will be required to approach banks for exchanging these notes," the RBI said in a statement.

Kprime's picture

the time is right, worldwide, for a bitcoin style currency beyond control of governments.

madtechnician's picture

"bitcoin style" ? - it's already here and it's actually already called bitcoin.

Kprime's picture

in theory bitcoin could work. 

I'm just not smart enough to know if bitcoin is actually government proof, yet.  It make take a few more iterations before that goal is achieved.  Time tells all.

Argos's picture

I was thinking that something like this would happen here when they came out with the new 100's. 

The Wisp's picture

Wonder if America will try the same thing,? flush out the preppers and druggies not paying ( depositors tax )

cro_maat's picture

Not if but when and probably sooner than later. The one thing you can count on is that the banksters / cabal have yet another crash / war / confiscation / ponzi scheme (insert any other example of financial slavery) all prepped and ready to go. They have even bought the celebratory cigars and Bronfman will supply the booze once the trap has been sprung. I must say that nothing warms the CB's hearts more that printing a few trillion $ and handing them out for favors across the globe and then changing the design on the $100 bill and declaring all others null and void. Who didn't see that coming?

Vampyroteuthis infernalis's picture

"After March 31, 2014, it (RBI) will completely withdraw from circulation all bank notes issued prior to 2005."


I cry BS! They are taking a stab at inflation there. Won't work though.

youngman's picture

She can call Maduro for help....he can send some price

maskone909's picture

or some assassins to kill the desenters


bigrooster's picture

Farmers banks in China out of cash and now Argentina's currency collapse.  2014 is shaping up to be pretty exciting year.


Disclaimer:  Long beans, bullets and booze.

JuliaS's picture

I'm trying to go long booze, but it keeps running out.