Argentina Peso Collapses At Fastest Pace In 8 Months, Hits Record Low

Tyler Durden's picture


Since President Kirchner unleashed her 'cramdown' plan for Argentinian debt, the Peso has collapsed at the fastest pace since January's devaluation. The 'official' Peso prices has collapsed 1.3% in the last 2 day to 8.39 per USD - and Argentina's debt yields have surged (prices tumbled) but the black-market Blue-Dolar price has exploded to an all-time low at 13.8 per USD, implying massive devaluation is coming.


The official Peso rate just hit record lows and is accelerating rapidly...


The Dolar-Blue has imploded at 13.8 - record lows...


and bonds are starting to reflect devaluation fears...


Charts: Bloomberg

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Thu, 08/21/2014 - 14:18 | 5125917 knukles
knukles's picture

'Bout time for a cheap holiday in BA.

Thu, 08/21/2014 - 14:19 | 5125926 nope-1004
nope-1004's picture

Fed says "you won't play in our sandbox, then we export inflation to you."

It's either an economic policy of war, or military - take yer pick.


Thu, 08/21/2014 - 14:30 | 5125971 Harbanger
Harbanger's picture

I don't understand why gold or silver are not serving as a hedge against a devaluing peso.  If you look @ the 30 day chart of the peso (ARS) in silver for example, silver is now actually cheaper in pesos, in gold it's basically at the same price.

Thu, 08/21/2014 - 14:34 | 5125991 knukles
knukles's picture

Turn the chart upside down.  That'll make as much sense as anything else out there.

Thu, 08/21/2014 - 14:46 | 5126066 Spine01
Spine01's picture

The reason is that the people there just CAN NOT buy PMs at these prices. They are like the official dollar prices they are not real market prices, but artificial prices.

Thu, 08/21/2014 - 15:09 | 5126170 Spine01
Spine01's picture

Nobody seems to understan what is going on in Argentina and why they are making decisions apparently against their interests.  Well, it is really simple. Their current president was never supposed to be in charge of the Country, but her husband, who handled, the corrupt, the leftist and the mafia elements with a very hard hand, to the point of being considered a psychopath. When he died, all hell broke loose. Basically, the current government is formed by an unofficial tolerance between leftist elements that couldn't even hope to hold onto power for long without the mafia elements, and the extremely corrupt mafia side, close as always to trafficking.  

This unlikely partnership joins at the hip a revolutionary group that wants banksters and corrupt governments to self destroy with people that only want to be left alone and do their business as usual with no official interference. Their current Minister of Economy is a declared leftist, aligned with most of what publishes and probaly an avid reader of its publications. Known by his classmates as an extremely smart guy.

What Elliott unwittingly did,is to provide the excuse the leftists needed to radicalize their positions even more. The last supply law sent to parliament places a wedge that will destroy private property. Thus effectively confronting the industrial, capitalistic side of society to the radical left. All the while drugs run rampant into and out of the Country. 

Elliott has been very useful to Cristina's followers. By the way, the new law was ezsentially copied from Venezuela's supply law. I think we all know how that ended up, dont we?

Thu, 08/21/2014 - 15:32 | 5126351 SafelyGraze
SafelyGraze's picture

if you *increase* your debt, you *decrease* the value of your currency unit as you print more of it

so if you *default* on your debt, you should *increase* the value of your currency because there will be less of it issued in payment of debt

so I find this argentina thing confusing

likewise the whole quantitative easing thing

it seems kinda opposite from what makes sense, from a treasury perspective



Thu, 08/21/2014 - 15:06 | 5126187 seek
seek's picture

This is really the key. There's an Argentinian survivalist (Ferfal) that talks about this on his blog, there are massive gaps between exchange rates for anythong on the street v. documented rates.

There's a reason that blue dollar chart above exists -- that's the street exchange rate v. the real exchange rate. The Argentinian government does everything it can to interfere with the exchanges, too. On August 5th they pulled the plug on the main bitcoin exchange service there, since that was starting to be an alternative.

We'd really need to see a "blue gold" number to make any kind of fair comparison, as you point out.

Thu, 08/21/2014 - 15:13 | 5126226 fonzannoon
fonzannoon's picture

anyone who buys their thongs on the street deserves whatever comes their way.

Thu, 08/21/2014 - 15:27 | 5126303 seek
seek's picture

Proofreading has never been my strong point.

Thu, 08/21/2014 - 15:29 | 5126333 fonzannoon
fonzannoon's picture

you know I am just fkin arond.

Thu, 08/21/2014 - 15:57 | 5126364 Harbanger
Harbanger's picture

That's why a leftist Govt like they have in Argentina right now is even more dangerous than a central bank and it's devaluing fiat.  If the gov is hell bent on taking your money and property rights you're fucked even if you try to save yourself.

Thu, 08/21/2014 - 14:34 | 5125992 fonzannoon
fonzannoon's picture

That is a very interesting point. I can't actually remember a ZH article that showed a crashing latin american or whatever currency (against the usd of course) followed by a chart of gold going up in that country. Not once ever.

All I see are goffy jokes about the stock market in that country going up hundreds of percent....which is kinda what everyone there was hoping gold would have done for them....

Thu, 08/21/2014 - 14:42 | 5126027 Harbanger
Harbanger's picture

I never understood why the Argentinians hedge their currency in USD.  Looking at this chart it makes sense.  I still don't get it though, there's something I'm not seeing.

Thu, 08/21/2014 - 14:44 | 5126054 fonzannoon
fonzannoon's picture

I'd like to see a chart of gold in S.A Rand if anyone has it. Look at their currency and economy go tits up just the way we all pictured the U.S would (interest rate spikes etc) due to all the problems we complain about here....all because USD is drying up over there. You know Harbanger....if I was some rich bigshot American...I'd wait until it really crashes and come in and buy the fucking place.....I have a feeling they might take USD....


"JOHANNESBURG (Reuters) - South Africa's rand was largely unchanged against the U.S. dollar on Tuesday, recovering after four sessions of losses but still unable to shake off negative economic sentiment following a banking downgrade this week.

The effects of low growth, high unemployment and crippling labour unrest were highlighted by unsecured lender African Bank's collapse this month and rating's agency Moody's downgrade of South Africa's main commercial banks on Tuesday.


Government bonds followed the rand weaker. The yield on the paper due next year ticked-up 2.5 basis points to 6.6 percent, while yields on the longer-dated 2026 paper rose 3 basis points to 8.275 percent."

Thu, 08/21/2014 - 14:48 | 5126074 ilion
Thu, 08/21/2014 - 17:51 | 5127111 what's that smell
what's that smell's picture

when the money changers get paid, the value of the currency goes up.

when the money changers get screwed, the value of the currency goes down.


Thu, 08/21/2014 - 15:03 | 5126164 Kirk2NCC1701
Kirk2NCC1701's picture

Fonz, I'd hate to admit it, but there really IS something to having your global currency backed by Oil plus Brute Force, as the US is doing.

We can all be sure that this can't/won't last, but 95% of us could also be poor or broke by betting against it too soon.  What's that adage about Mitigating Risk by Diversifying Assets, or "Don't bet against the Fed"?

If I do the latter -- and I do, alas -- then I need to do the former:  Diversify.  And you, what are you doing?

p.s. Friends, I got my Hushmail account cancelled by their webmaster, because I don't use it often enough (more than once per week).  Will have to find a more friendly alternative.

Thu, 08/21/2014 - 16:54 | 5126742 jimmytorpedo
jimmytorpedo's picture

I got bumped from hushmail too.

''   out of Iceland looks interesting

Anyone done some dd on them?

Thu, 08/21/2014 - 17:55 | 5127124 what's that smell
what's that smell's picture


stupendous insights, dumbfuck.

you be sitting at the back of the bus........

selling the better-than-hushmail queer fanboy attack.


Thu, 08/21/2014 - 18:44 | 5127403 petux
petux's picture

Kirk re Email Countermail have been good to me.

Thu, 08/21/2014 - 15:05 | 5126172 holgerdanske
holgerdanske's picture

Here you go:

Ignore the bumps on the graph, draw a straight line, and Bob's your uncle.!

Nothing to be in doubt about longer term.


Thu, 08/21/2014 - 15:12 | 5126219 fonzannoon
fonzannoon's picture

Thanks for the chart. Funny it seems like gold has stalled out there since 2012. Should be interesting to see what it does from here as the shit hits the fan,

Thu, 08/21/2014 - 14:57 | 5126143 holgerdanske
holgerdanske's picture

Ha ha, you are far too brainwashed to ask the right questions. It is not a questioin of Gold versus the Pesos, it is in essence a question og gold agains ANY fiat currency, and that includes the Dollar!


But apart from that, you are right, there is a strange disconnect. This is mainly caused by the availability of fiat gold. The availability of physical is about 1% of total. So when the times comes, 99 out of 100 will sit with toilet paper, but it won't even work for that purpose.

The paper gold is the broken wheel in the gold wagon. It is just amatter of time before it comes off. As long as it is still attached, "gold", 99% of it paper, will behave as a non redeemable currency and suffer the fate of all other currencies. The 1% is the key. That is physical gold in your possession.That is your lifeboat, and it will float when nothing else will.

Nothing more, nothing less.

Thu, 08/21/2014 - 15:30 | 5126304 Harbanger
Harbanger's picture

I saw the chart you posted and also did the ten year in ARS and what you're saying makes sense.  Why do you think there isn't an immediate increase in gold/silver price in a particular currency, when for example, the peso say loses 15% of it's value against the USD?  I would have expected there be a 15% increase in PM price in that currency.

Thu, 08/21/2014 - 16:09 | 5126544 holgerdanske
holgerdanske's picture

I think in the case of the Peso, it depends on what exchange rate you use. The official rate is far removed from what you can get on the grey market.


The grey market rate might well have responded as you would expect, I think it would have/will, but somebody on here would know that currency much better than me.

Thu, 08/21/2014 - 18:15 | 5127242 Gromit
Thu, 08/21/2014 - 17:01 | 5126801 Stormtrooper
Stormtrooper's picture

You said most of it but not all.  Dollar=Euro=Yen=Yuan=Bitcoin=all fiat currencies=inherent value=0

1 ounce gold in 1800= 200 pounds beef

1 ounce gold in2014=200 pounds beef


People have a difficult time wrapping their heads around the concept of money vs. government fiat.

Thu, 08/21/2014 - 18:14 | 5127235 Gromit
Gromit's picture

They can buy PMs they just prefer physical hundreds.

Also some Bitcoin aficianados.

Thu, 08/21/2014 - 14:52 | 5126106 twh99
twh99's picture

Except it isn't the fed doing it, it's the market.  No one trusts Argentina. 

Once a deadbeat always a deadbeat.

Thu, 08/21/2014 - 14:22 | 5125938 fonzannoon
fonzannoon's picture

why a cheap holiday? ekm says thats not true. he said it's just digits in a computer. not real. Argentina is rejecting the dollar, thats why it's....crashing....against.....the dollar.....?  that means you are not real. so if you book a trip there now and it's cheaper that means you are snufalufugus.

Thu, 08/21/2014 - 14:29 | 5125968 Dr. Engali
Dr. Engali's picture

Fonz..... you're talking to an avatar.... think about it. BTW, the snufalufugus is real. I saw him.

Thu, 08/21/2014 - 14:32 | 5125988 knukles
knukles's picture

What avatar?  Mrs K loves me the way I am.  And I'm very secure in my looks.
It's not  nice to make fun of the disfigured, Doc.
In person it's enhanced with the lisp and drooling.

Thu, 08/21/2014 - 14:30 | 5125982 knukles
knukles's picture

Is that one of those guys from LA that I saw in the locker room the other day ... Deep tan from head to toe... including the toes.  And his buddy.  No hair on the body.  At all.  Not even peach fuzz.  And his buddy.  White boys do not usually have no hair.  Lots and lots of heavy gold chains.  Buffed, washboard abs.  Curly greasy pommed hair. 
Like that?
Or something worse?
Like from New Jersey with a wife beater and tats.  Lotsa tats.  Like The Situation?
Tell me it ain't so, Fonz.

Thu, 08/21/2014 - 15:51 | 5126469 First There Is ...
First There Is A Mountain's picture

You'd think, huh? But factoring in inflation you're going to discover that your "cheap vacation" to BsAs to get a piece of Latina ass, swig some Malbec and eat steak was more expensive than heading to Thailand. Believe me - I own a property there. 

Thu, 08/21/2014 - 17:56 | 5127139 Gromit
Gromit's picture

Yes - off to BsAs early October to pick up my bond interest LOL

Thu, 08/21/2014 - 18:12 | 5127224 Gromit
Gromit's picture

According to the Buenos Aires Herald Judge Griesa did not hold Argentina in contempt of Court today - so I can pick up my interest without fear of being held in contempt of Court myself LOL.

Thu, 08/21/2014 - 14:17 | 5125919 JailBank
JailBank's picture

Buy! Buy! Buy! Everyone is buying? Sell! Sell! Sell!

Thu, 08/21/2014 - 14:19 | 5125929 smacker
smacker's picture

Christine Lagarde is now laughing and waiting for the Argies to request an IMF bail -out.

Thu, 08/21/2014 - 14:26 | 5125958 cro_maat
cro_maat's picture

Except that they are already at the table with the new BRICS bank. Christine should stop doing meth.

Thu, 08/21/2014 - 15:11 | 5126209 smacker
smacker's picture

"...they are already at the table with the new BRICS bank"

Some evidence of this?

Thu, 08/21/2014 - 19:48 | 5127730 Angry Plant
Angry Plant's picture

Good Bye and good riddance to Argentina borrowing from the west then.

Good luck to the BRIS's ever getting any money they lend to Argentina back the country has a 15 year average default rate.

Thu, 08/21/2014 - 15:14 | 5126220 Kirk2NCC1701
Kirk2NCC1701's picture

Can't wait for the other shoe to fall:  Argentina announces Currency Reset, linked to BRIICS sytems, making it the ABRIICS or BRIICSA system.

If that happens, I'll get a serious Kirschner crush.  BTW, they should Short the shit out of Singer's stuff just before they drop that Bomb.

Thu, 08/21/2014 - 14:20 | 5125934 Dr. Engali
Dr. Engali's picture

The citizens of Argentina are running to king dollar.


I'm Larry Kudlow and I approved this message.

Thu, 08/21/2014 - 14:33 | 5125994 Salah
Salah's picture

They came 'this close' to dollarizing once in the nineties....hey, maybe they'll really do it this time, and with all that Vaca Muerta O&G.....who knows where this could go?  Can you say "Abu Dhabi", Cristina?

Thu, 08/21/2014 - 14:34 | 5125995 Kirk2NCC1701
Kirk2NCC1701's picture

Larry, when the Globalist Oligarchs finally give us a One-World Government, will they replace King Dollar with King Shekel?

And will it be backed by the World Police and the Global Gold Reserve, stored at the rebuilt King Solomon Temple?

Is this what Global Zionists dream of, Larry?

Thu, 08/21/2014 - 14:54 | 5126103 Kirk2NCC1701
Kirk2NCC1701's picture

+1 and -1.  Cool.  My Loyal Buddy and my Loyal Junker are both onboard.

Hi guys.  I sincerly would love to have a beer with both of you, as it would make for a good "Argument".  "5 minute or Half-Hour Arguments" are both fine.  :-)

Thu, 08/21/2014 - 14:22 | 5125940 bardot63
bardot63's picture

Black swan.  Can you still say "black?"

Thu, 08/21/2014 - 14:26 | 5125959 youngman
youngman's picture

Watch out Eric holder might show up to investigate

Thu, 08/21/2014 - 15:59 | 5126178 giggler321
giggler321's picture

has he got another sibling to act as a sapling then?

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