South America Blog
About this blog
Wayne Bernhardson is the author of Moon Handbooks to Buenos Aires, Chile, Argentina, and Patagonia. Here he shares his vast knowledge of South America and its people.
- The Papal Cumbia
- The Uruguayan Sacraments: Tango & Mate
- Taxing the Tourist: Argentina's AFIP Aims Low
- Fortress Falklands: A Book Review
- Pope Argentinus I, The Musical: Ragtime Meets Tango
- Credit Where Credit Is Undue?
- ¿Adios Hugo?
- When "No" Is A Positive
- Chile and Its "Crazies"
- The Oscars: A Post Mortem, So to Speak
- Sacrificing the Atacama? A Chilean View of Dakar
- Chilean Oscar Faceoff? "No" v. "Kon-Tiki"
- Friday Digest: Southern Cone Nuggets
- Dancing in the Mud? The Andean Aftermath
- Floods & Mud: Summer Storms Hit the Andes
Argentine Peso Plunge Persists
Not so long ago, I wrote a post about the exchange rate breach between Argentina’s official peso and the US dollar which, when I left Buenos Aires in mid-December, was selling for about 6.30 pesos on the “parallel market.” The official rate was then, and still is, slightly below five pesos but, on Friday, the skyrocketing dollar rose briefly above eight pesos before dropping slightly below at day's end.
The government of president Cristina Fernández de Kirchner professes to be unconcerned, suggesting that the dollar’s rising value is a seasonal phenomenon, as Argentines unable to purchase dollars legally are seeking them to travel elsewhere in South America or overseas. That’s not totally preposterous, as January and February are the prime vacation months, but the rapid rise has to be cause for concern, especially when other regional currencies, such as the Chilean peso, are appreciating against the dollar.
It’s still a marginal market but, on Friday, the Buenos Aires Herald editorialized that the parallel exchange rate was “one of the many self-inflicted wounds from the currency curbs of the past 15 months which have been gradually strangling economic activity…” This week, even the loyalist daily Página/12 criticized the government for arbitrary exchange policies of “clumsy implementation, lacking transparency” that refuses to explain why it “grants or denies funds to citizens who want to exercise their right to leave the country…”
On Friday, though, the city daily Clarín suggested that government-friendly bankers could undercut the parallel market by selling dollars on the cheap, in an attempt to maintain the official rate. Meanwhile, the International Monetary Fund has censured Argentina for falsifying economic statistics, including inflation figures, allowing the country to repay its loans on more advantageous terms. A recent Los Angeles Times column, by statistician Joseph Kadane, explains the issues thoroughly.
What does this mean for visitors, though? Well, at the official exchange rate, with 25 percent inflation rather than the 10 percent the government admits to, Argentina is getting more expensive. At eight pesos to the dollar, it’s considerably cheaper but, as I’ve suggested before, getting that rate can be risky for visitors who don’t know their way around. One intermediate alternative, whose legality falls into a grey zone, is Xoom, which pays less than the black market rate but considerably more than the official rate – as of yesterday, it was about 7.40 pesos to the dollar.
I have not used Xoom myself, but I’ve had good feedback on their service from friends in Buenos Aires. It involves a bank transfer that takes place outside Argentina’s borders; Xoom then transfers the peso equivalent for a cash payout in Buenos Aires – there’s a convenient outlet in the Retiro neighborhood - or another Argentine city (there are only a handful in the provinces, however – for instance, the only Patagonian option is the city of Trelew, in Chubut province). This is obviously less convenient than the corner ATM, but the difference is great enough that it’s certainly worth consideration.