chi chi wrote:Prices in Peru go up all the time so the increase of the value of the dollar won't make a difference in your buying power.
Sergio Bernales wrote:It means, the terms of trade for Ecuador have gone from bad to awful, which should in the medium to long term lead to lower prices and probably outright deflation. There is also a good chance of a balance of payments crisis as oil accounts for 40% Ecuador's exports and the price has more than halved in the last year. Not only that, government depends on oil for most of its income, so it will have problems paying its workers, social services, etc, and the country will struggle to pay its bills to foreign creditors. Expect perhaps another deal with China to sell cheap oil to get loans and lots of strikes as government employees are either sacked or their wages cut.
However, in the short term, there will be little difference in prices, as businesses are reluctant to lower prices and workers are unwilling to take pay cuts. However, as government and employers try to respond to more difficult economic conditions with the exchange rate acting against them, the most likely outcome in the near term is political instability in Ecuador.
In response to chi-chi-nomics, the inflation rate in Peru as of February 2015 is 2.77% adjusted on a yearly basis. The sol has dropped 8.2% against the dollar in a similar period, therefore, the purchasing power of the US dollar has increased significantly. You'll get more bang for your buck. Expect the dollar to keep rising and the sol to keep falling, as the prices of the commodities that are Peru's main exports, such as copper, remain depressed.
http://ieconomics.com/peru-inflation-rate-forecast
http://www.bloomberg.com/news/articles/ ... eat-to-cpi
Sergio Bernales wrote:It means, the terms of trade for Ecuador have gone from bad to awful, which should in the medium to long term lead to lower prices and probably outright deflation.
Sergio Bernales wrote:In response to chi-chi-nomics, the inflation rate in Peru as of February 2015 is 2.77% adjusted on a yearly basis. The sol has dropped 8.2% against the dollar in a similar period, therefore, the purchasing power of the US dollar has increased significantly. You'll get more bang for your buck. Expect the dollar to keep rising and the sol to keep falling, as the prices of the commodities that are Peru's main exports, such as copper, remain depressed.
chi chi wrote:Sergio Bernales wrote:In response to chi-chi-nomics, the inflation rate in Peru as of February 2015 is 2.77% adjusted on a yearly basis. The sol has dropped 8.2% against the dollar in a similar period, therefore, the purchasing power of the US dollar has increased significantly. You'll get more bang for your buck. Expect the dollar to keep rising and the sol to keep falling, as the prices of the commodities that are Peru's main exports, such as copper, remain depressed.
If the dollar goes up then the rough traders will just increase the special ''gringo prices''.
I expect that especially the taxi fares at Jorge Chavez will be beefed up for gringos as they assume that gringos hopping off a flight have ''harta plata''. And that they brought even more plata with them than ever before.
chi chi wrote:Sergio Bernales wrote:In response to chi-chi-nomics, the inflation rate in Peru as of February 2015 is 2.77% adjusted on a yearly basis. The sol has dropped 8.2% against the dollar in a similar period, therefore, the purchasing power of the US dollar has increased significantly. You'll get more bang for your buck. Expect the dollar to keep rising and the sol to keep falling, as the prices of the commodities that are Peru's main exports, such as copper, remain depressed.
If the dollar goes up then the rough traders will just increase the special ''gringo prices''.
I expect that especially the taxi fares at Jorge Chavez will be beefed up for gringos as they assume that gringos hopping off a flight have ''harta plata''. And that they brought even more plata with them than ever before.
19naia wrote:Sergio Bernales wrote:It means, the terms of trade for Ecuador have gone from bad to awful, which should in the medium to long term lead to lower prices and probably outright deflation.
Thats what i was wondering.. Its easier to wrap my head around exchange rates between two different currencies, but not as easy to wrap my head around economic adjustments between two very different class of economies using the same currency.. It seems like it would have to deflate in Ecuador, but i wasn't sure exactly what the backbone parts of their economy are... For all i could see, it could possibly benefit Ecuador being that they have dollars and that would trade well in their favor for imports from countries who's currency is falling behind the dollar... But its always more complex than that when they are so tied into the regional economy that includes Peru ,and they are all trying to grow into earning from exporting.. Exports is where they suffer when their dollar price becomes too much to attract foreign buyers who end up having to pay more because their currency doesn't convert favorably into the $ Ecuador uses..
Thanks