What are Argentines to think when the government tells them to save in pesos, not in dollars (which bitter experience of economic crisis has taught them can be a safer bet) – and then one prominent figure turns round and admits that he saves in dollars himself and has no intention of selling until the unofficial exchange rate drops?
Aníbal Fernández, the former cabinet chief, who is now a government senator said this week it was time for Argentines to start “thinking in pesos”. But quizzed about his own dollar savings, he flew off the handle. He saved in dollars “because I feel like it” and “I do what I like with my money”, he snapped. (He later apologised.)
But as talk of intensifying government steps to “pesify” the economy, even Fernández has admitted that he won’t sell his dollars at a loss.
The black-market exchange rate has eased this week to just below 6 pesos per dollar after touching a historic high of 6.15 last week – but that’s still a far cry from the official exchange rate of around 4.47.
Tempers are fraying, and in middle-class districts of the capital on Thursday night, people were out on street corners banging pots and pans again – a sure sign public discontent is growing.
Irritation is mounting that the government is applying increasing restrictions on purchases of dollars (the latest rule is for people to have to fill in a special tax form when they buy holiday packages – detailing how much they paid, in what currency, in how many credit card installments, their departure and return dates, and travel agent details) – that has left many wondering if a punishing devaluation that could stoke already high inflation is on the cards.
The government has its work cut out to keep the economy ticking along smoothly amid high inflation with mid-term elections due next year. As independent economist Luis Secco puts it:
The problem facing Argentina today is that, in a context in which the terms of trade are no longer growing and agricultural production turned out lower than last season, the current levels of consumption can’t be financed.
Devaluing is one way out, but the government has denied that is on the cards.
The government needs good news. Can YPF – whose renationalisation in May was greeted with public euphoria – deliver again? On Monday, it holds its maiden shareholders’ meeting since the ejection of Spain’s Repsol.
The government accuses Repsol of trying to avoid investing to boost production to force Argentina to have international energy prices, and boasts a 4.7 per cent rise in oil and gas production since the nationalisation. Can it produce more good news to seduce and soothe fraying Argentine tempers?