The days of the weak Argentina Peso are finished, that's official now

I was going to use a picture of BCRA head Martin Redrado, but as his wife
Ivana is much prettier, here's her snapshot instead.

To borrow a line from 'Allo Allo', "Leesern very carefullee, I shall say zis only once."

In this post back in August, I told you what was happening at the Argentine Central Bank. Here's an excerpt:

"However, this time ArgyBizDude might have to lump it. Word is that Martin Redrado, anglophile and big cheese at the Argentine Central Bank (BCRA) is pushing los Kirchner to finally...FINALLY allow the peso to revalue. In off-the-record-third-party gossip (that's from a normally pretty accurate source), Redrado is reported to have said to his inner circle that the weak Peso has had its day and that monetary policy must be changed to attack inflation."

Yesterday, things suddenly moved forward on this issue. Wife of the leader of Argentina, Klishtina Fernandesh de Kirchner, said this:

"A very high exchange rate (i.e. a weak Peso) is inconsistent with anti-inflation policy."

That, dear reader, is a big shift in official rhetoric. It means that Los Kirchner have

1) Listened to Martin Redrado
2) Listened to reason
3) Finally learned a bit about basic economics. It took 'em five years, but better late than never I suppose....

But the real jawdropper hit my screen this morning, because the President of Fiat Argentina, Cristiano Rattazzi, said the following referring to the above remarks:

"The President made a tremedously sensible and logical speech. Often things are done that are inconsistent with the medium-term and are simply good for today."

If you know about the Argentine business scene, that one is a knock-down statement. Along with the cereal producers, the auto industry has been the loudest voice all this time for keeping the weak Peso. This simply because their exports (mainly to Brazil) have been greatly benefitted from this policy. This therefore means that:

1) The auto industry now sees inflation as its biggest problem, too
2) Los Kirchner have had a quiet word in the ear of the auto people and have told them to get ready for the change and to support it (I'm not joking on this one...that's how Argentina works)
3) The big move to a stronger Peso is just around the corner.

A stronger peso will also give the Kirchners sweet revenge against the troublesome agro boyz, it must be remembered. That'll be even more reason for the country to let the Peso appreciate! Otto therefore goes on record and says, "Buy the Argentine Peso, with an initial target of P$2.80 to the dollar and a 10% profit coming to you very soon."

You heard it here first, dudes.