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Argentina’s armchair economists fixate on the peso

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Argentina’s armchair economists fixate on the peso

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Argentina’s armchair economists fixate on the peso

Historic economic volatility has turned Argentines into veteran currency speculators

Highs and lows: most Argentines are more interested in forecasts for the value of the dollar than the weather © AP

Most of the time, the caretaker of the building next door to my home in Buenos Aires hangs around in the street, languidly smoking cigarettes or exchanging idle gossip with the hairdresser two doors down. Lately, she has seemed somewhat agitated.

A few weeks ago, she came running up as I was on my way out and tapped me on the shoulder, blurting out: “Do you have any dollars to sell?” 

Unsure of what to make of her assumption that I might have a stash of dollars lying around to sell to her, I politely declined. “The peso is going through the roof, now is the time to sell them,” she responded fretfully.

Her concern was understandable. That day in May, in the thick of the recent run on the currency, the peso fell several percentage points against the dollar. It has lost more than a third of its value this year. In an effort to calm nerves, President Mauricio Macri controversially secured a $50bn credit line from the IMF. Its announcement in June brought back bad memories of the previous time the IMF lent to Argentina, resulting in a devastating financial crash in 2001.

Back then, you could buy a dollar with one peso. Now, a buck costs about 28 pesos. So it is hardly surprising that Argentines are hyper-aware of the value of their currency. It is no exaggeration to say that most Argentines are more interested in hearing forecasts for the value of the dollar (they tend to talk about the dollar, not the peso) than the weather.

Argentina’s economic volatility of the past has had a profound impact on its people. Many are not just veteran currency speculators like my neighbour but are also well-versed in the finer points of macroeconomic theory. It is perfectly normal, for example, to have a heated debate at a dinner party, with no trained economists present, about whether the current account deficit or the budget is the most to blame for the economy’s problems. Nor is it unusual to have an informed discussion with a taxi driver about the central bank’s approach to intervention in the foreign exchange markets.

“What the central bank is doing is insane. Why would you sell billions of dollars for 20 pesos, only to let the peso slide later without intervening? It makes no sense to me,” one morose cab driver said to me recently, reflecting on the bank’s vain attempts to support the value of the peso. I found myself nodding in agreement as he jerkily negotiated one of the city’s main avenues at breakneck speed.

Repeated economic crises over more than half a century have forced Argentines to inform themselves about economic affairs. If you don’t, you lose out. An economist friend recently pointed out to me that, at the age of 14, he was already “a little speculator”, buying bus tickets to school during the 1980s, when inflation was running at about 30 per cent a month. 

“It was obvious that on the first day of every month they would increase bus prices. I remember asking my parents for as much money as they could give me, and I would buy an entire month’s worth of tickets on the last day of each month.”

With economic phenomena occupying such a central feature of daily life, professional economists enjoy a special role in society. Many become celebrities, regularly appearing on primetime television shows. They attract hundreds of thousands of followers on Twitter. The top economist of the nation — the economy minister — has traditionally been known as a “super minister”.

The irony, of course, is that despite this apparent proliferation of economists, Argentina has been manifestly incapable of fixing its economic woes. 

The “super minister” of the moment, Nicolás Dujovne, points out that, while there is no shortage of armchair economists, clamouring to explain what is going on to an anxious public, there are not that many academic economists. He even suspects that Argentina may have fewer economists per capita than many other countries.

“I always say that the success of Argentina can be measured the day that people don’t know who the economy minister is,” he muses in his office overlooking the presidential palace in Buenos Aires. “Let’s hope that in a few years’ time they will have no idea; that will mean that things are going well.”

benedict.mander@ft.com

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