Hi there!
After my first post I received this question a couple of times: "How does the economy works in your country?". So to be fair, I will give my brief but sincere point of view about this.
First of all, let's remember Argentina is located in South America (I mention this because it's impressive how messed up society is about geopraphy). Latin America is characterized for having the worst economy ever, each country has its currency and one couldn't be more unstable than the other, they all basically depend of dollars (USD). It sounds weird, I know. I mean, if the country has its own currency what does the USD has to be? Well I believe LATAM has a "dependent economy".
Economic dependence can be considered a situation in which the production and wealth of some countries are conditioned by the development and combined conditions of other countries to which they are subjected. The "centre-periphery" model describes the relationship between the central economy, self-sufficient and prosperous, and the peripheral economies, isolated from each other, weak and not very competitive. Contrary to the classic idea that international trade benefits all participants, these models advocate that only the central economies are the ones that benefit.
And guess what? You can't name any country that actually has a real central economy in Latin America! So going back to the question, why does the USD plays an important part in all this? Well it's obvious, due its stability and relationship with oil. Unlike national currencies, such as the Argentine peso, the dollar is a world currency: 70 percent of international transactions are made in dollars and that's why they have a lot of influence in economies like ours (from this point I'm calling Argentina economy as mine).
I arrived to Argentina 4 years ago and I remember I could buy 1 dollar (USD) with 24 argentine pesos (ARS), today the story is completely different.
How many times have I heard a conversation on the street about how the price of the dollar affects your day to day life? According to a study by the International Institute of Finance, Argentina is within the group of 5 countries in which the rise in the dollar price is transferred more easily to the national economy.
In addition to this, we have to take in consideration politics and its poor management of economy. To the date, the country has one of the highest inflation rates in Latin America and its president only seem to think about "controlling" the USD currency.
What do I mean by controlling? In Argentina you can't buy more than 200$ USD LEGALLY (official dollar) per month, when we speak of the official dollar, we refer to the value of the dollar price in banks and exchange houses authorized to operate by the Central Bank of Argentina. Now when you buy dollars you must add a 65% total taxes to the price. Why? Well let me just tell you one of the taxes is named "country tax". For example, if the banks sells 1 USD per 118,5 ARS, you just add to that price the taxes and actually buy 1 USD for 195,52 ARS.
So all of this, sets the perfect scenario for the birth of a black market, where you can buy dollars in "caves" (exchange houses) or through someone you know who has something extra that they want to sell. As a result of this, a price different from that of the official dollar was born, called "dollar blue", its price doesn't not change a lot from the official one.
After saying all this, I will conclude with the following about how does the price of the dollar impact the basics:
Transportation and the food market?
The price of oil is always defined by the dollar, so its increase is reflected in fuels and therefore in transportation. The increases in gasoline and diesel fuel, caused by the increase in the dollar, reach food in a very short time, because the cost of transporting them increases, and therefore their final price in the gondolas.
Housing and mortgage loans
Paying off a mortgage loan in pesos becomes an impossible task when the price of the dollar rises. Why does this happen? Because homes in Argentina are valued in dollars and, if the value of the US currency increases, more pesos are needed to pay the installments (so you can say good-bye to the hopes of buying a house with an average job).
Technological products and services on demand
A great part of the Argentine economy is dollarized and although currently on-demand services (for example, Netflix) present in many cases the option of paying in pesos, their costs are defined in dollars. If the price of the dollar rises, this type of service quickly increases in cost.
If the price of the dollar changes, does the ability to save change?
As long as more pesos are needed to pay one dollar, it deteriorates the value of the savings you hold in local currency.
Your savings can also be impacted by inflation, since there is a general increase in prices, not only of the dollar, but of various goods and services in the economy. Therefore, it is important to look for investment alternatives, in order to maintain the value of the money like buying as many USD you can or holding cryptocurrencies.
After saying all that, you can figure out the reason why I joined. To find a way to fight back inflation, to understand better how economy and cryptocurrency works and obviously to ventilate all this I've been holding up.
Until the next time!!