Dollar Blue doubles official Argentine Peso exchange rate

On the 14th of May, the Dolar Blue reached 100% higher than the official Argentine Peso exchange rate. The official rate of 5.22 Pesos/USD was dwarfed by the black-market rate of 10.45 Pesos/USD. It has since scaled back a bit to 9.4 as of writing.

What does this mean?

1. Argentina lies.

2. If you go on vacation in Argentina with US Dollars and change them through Arbolitos, you can have your vacation at half price. Party like a Rock Star.

Other examples abound. I have a travel agent in Argentina who plays the arbitrage between currencies, and I can save hundreds of dollars by booking flights through him if I pay in USD (we split the difference). He’s happy, I’m happy. This summer after I visit my mother in the USA, I will fly from Chicago to Indonesia, and then back again, for about USD$1800 round trip. Thanks, Kristina!

What does this mean for Argentina’s future?

1. They will devalue soon.

2. They will devalue soon.

3. They will devalue soon.

4. Argies are all using USD anyways despite the currency controls.

There’s no way around it. They will have to stop forcing people to go by an exchange rate that is twice as crappy as what folks are trading with now, and the only politically “viable” way to do it is to rob those who have saved in Pesos by chopping their currency off at the knees. Look for Chavez-style revaluation in the very near future.

Playing the currency game in Argentina

Buenos Aires, Argentina:

We’re here in BA to visit RomanianBob for his birthday (observed). Before the trip we put together our “Bourne File” with our various currencies, which we always tally up before an international trip. We have Paraguayan Guarani, Chilean Peso, Uruguayan Peso, Canadian Dollar, Brazilian Real, US Dollar, a couple of Euro notes, and Argentine Pesos from our last jaunt a couple of years ago. Basically the leftovers from our various wanderings. And some various 500 Trillion Zimbabwe Dollar notes which we like to leave in the tip jar as a joke and warning to the curious.

WifeBob is fascinated with the dynamics of the ongoing currency debacle in Argentina. How does good money push out the bad in a market so severely distorted? For example, the government rate is AR$4.71 per US dollar, but the black market rate is AR$6.20, you can negotiate anywhere from 5.5 to 6 if you pay in cash for something, and the automatic credit card exchange rate is like spinning a slot machine since you don’t know what you’ll get. In short: at the end of the day, you really don’t know what sort of value you are getting, because it’s such a mess.

This morning, 10 pesos for a few slices of cheese. So we pay in AR$. But it was change from a transaction last night in which we paid US$ for and got back AR$ in change, at a rate of about 5.5. So what did we pay? Who knows. Did we get a deal, or was it a ripoff? Who knows. Should we spend the worthless Pesos first, or should we spend the Dollars and get a better deal? Who knows.

So if we can’t even keep track over a 24 hour span, how are accountants, businesses, and international financiers supposed to know what the heck is going on with their true values?

Despite the lack of ability to determine value, things still seem normal in BA. Life goes on for the Argies, as they patiently wait for the collapse and renewal after Kristina & Friends recklessly drive the country over the cliff.

Argentina continues to close every avenue of non-government currency exchange

PayPal has had to close down domestic transactions for Argentine customers. Apparently the Argentinos were opening two accounts and using them to send money to themselves, in order to take advantage of a better Peso-Dollar exchange rate than is available from the Kirchner regime. Details here.

Meanwhile, as of writing, the government rate is 4.69 Pesos per Dollar, and the black market rate is 6.34, a difference of 35% (source: dolarblue)