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I’m not a travel neophyte. Over thirty-five years, I have flown more than a million miles. I have traveled throughout Canada, the US and a handful of countries in Europe. Customs and cultures are distinctive, but I assume some things remain consistent regardless of where I go.
One of those pillars is money. Usually, I purchase a small amount of foreign currency before I leave, expecting I would use credit cards for most purchases. I use the currency for taxi rides, convenience stores, etc. Cases where credit cards are less likely to be accepted.
Argentina violated my assumptions.
There are two exchange rates in Argentina. There is a bank rate, which is used with ATM withdrawals or credit card changes. And there is a blue rate. This is a black market rate that more closely hews to the actual value of the Argentinean peso as compared to other currencies.
The most important takeaway. If you have a choice, pay cash. Like always. Bring foreign currency and exchange it at the blue rate. Or, if you’re already in Argentina, send money using Western Union. Paying cash will save you a lot of money. And I mean A LOT OF MONEY.
The reason for the two rates in Argentina starts, as many convoluted stories do, with the government.
Inflation in Argentina runs high for a developed country. It has averaged upwards of 10% over the last twenty-five years, and recently it has regularly been over 30%, especially since 2017. Think about what that means in terms of the cost of living. $100 of groceries now will cost you $130 in a year. Unless you have a commensurate bump in salary, that’s going to hurt. A typical response to such a situation would involve converting cash to foreign currencies. Convert 100 pesos to US$ today and next year, they will be worth 130 pesos. Such a choice is a no-brainer.
Unless you’re a government.
The transfer of wealth out of a country further devalues the currency, increasing inflation pressure. It’s a death spiral that the government can’t allow. So, in Argentina, they place limits on the citizenry. For example, they can convert only a few hundred pesos to US$ every month. Exacerbating the problem is that large dollar purchases in Argentina (such as automobiles or property) are quoted in US dollars. So people need to get US currency if they want to buy a car or house, even with the official limits.
Where there is demand that authorities suppress, a black market springs up. The black market for the Argentinean peso is, somewhat ironically, called the blue rate or the blue dollar.
Before you depart for Argentina, get your budget for the trip in US cash. Once you arrive, find someone willing to exchange dollars for pesos. Wander along Calle Florida, in Buenos Aires, and there are dozens of people calling out ‘Cambio’. You can find currency exchange offices (one that is not a bank). Or, as I already mentioned, send money to yourself using Western Union. And in case you are worried about legal entanglements, the arrangement is not against the law. It’s considered a private transaction.
The reason for going through the effort is how much you will save. The blue rate is significantly more than the bank rate. Because of inflation, the exchange rate increases over time, but the blue rate will always trump the official rate. In March, 2022. $10US would get about 110 pesos at the official rate, while $10US would get you 200 pesos at the blue rate. If you want to know the current rate, check out https://bluedollar.net.
That’s the margin that can make a serious difference in your vacation budget. And a big reason why, when in Argentina, you always want to pay in cash.