The Two Sides of the Coin; or Dealing with Argentina’s Double Economy: April 15, 2013

 

Bjorn and I were blissfully unaware before we came to Argentina that it has a “blue dollar”: the government’s rate of exchange for a U.S. dollar is lower than what can be found on the streets. Right now, for every dollar you withdraw from a bank, the exchange rate is about 5 pesos for every $1. On the street, money changers will give about 8 pesos for every dollar.

 

It’s also known as a black market dollar, but I find that to be a misnomer. Black market implies this kind of exchange happens in a shadowy underground of smoky, dim-lit bars populated with hulking men named Tiny and tired-eyed women in stained satin and fishnet stockings (Note: it’s possible I’ve watched too many gangster movies). In reality, the exchanges are done in broad daylight. Money changers blatantly call out their services on  Calle Florida (pronounced flow-REE-dah, not like the U.S. state or the rapper (though I give him props for the cleverness)) and Lavalle (la-VAH-shay, double l’s are pronounced like “sh” here), busy streets in the heart of Buenos Aires.  But exchanges are not limited to tourists and commercial areas; locals do the money exchanges among themselves all the time, too. The Buenos Aires Herald openly reports the blue dollar’s exchange rate and the official rate on its website. The Financial Times and the Economist have written articles about it.

 

Now I’m no economist, but I’m pretty sure this kind of thing can’t be good. I’m not even sure how it’s able to exist. Aren’t there supposed to be international laws against this kind of thing or agencies that monitor/prevent it? (Hello, IMF!) If everyone knows it is happening, why is nothing done to prevent it? (FYI: this line of questioning leads to headaches and necessitates emergency ice-cream runs.)

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Being aware of the blue dollar is bad enough, but living with it is its own brand of special torture. Case in point: Bjorn and I were fortunate to have an apartment in place before we came to Buenos Aires. However, we were specifically asked to pay the rent in U.S. dollars. When we got here, we foolishly gave what U.S. dollars we had for the rent. We thought nothing of it; after all, I am a U.S. citizen with a U.S. bank account. How hard could it be to get more? (Note to self: NEVER ask a question that begins with those five words again.)

 

We set off one fine morning for the bank. Our landlord had told us that we would be able to withdraw dollars as foreigners, but that Argentines were forbidden. As we jauntily sauntered down the street, we came across HSBC, an international bank. Huzzah! The ATMs even had this sign: U$S, which means that dollars can be withdrawn. Double huzzah! (Would that sound like huzzah-zah? Moving on…)

 

Try as we might (and we did, several times, at more than one ATM), we kept getting a screen that said that transaction is not allowed. However, we were able to withdraw pesos at the 5-pesos: $1 rate. Strange, we thought. The same thing happened at another nearby bank’s ATMs. Bjorn suggested we go downtown, to the Plaza de Mayo area, where most of the main bank offices are located.

We went into the first bank we saw downtown off the subte (subway): Santander Rio, a popular bank of Argentina. The woman at the front desk told us dollars could not be withdrawn there. However, the security guard told us it might be possible at the main Santander Rio, which was a couple of blocks away. He gave us directions and we went on our way.

 

When we got to Santander Rio, a nice security guard directed us to the information desk which was located downstairs. We were flatly denied any dollars. Seeing the dejected look on our faces as we left, the security guard said we might have better luck at the main HSBC. He gave us directions and we set off through the maze of small streets and construction that are abundant off of Plaza de Mayo.

 

When we finally found the main HSBC, we had to wait in a long line (a common occurrence. In fact, if you see a long line of people in Argentina, that more than likely signals the presence of a  bank.) When we finally got to the information desk, we were told that foreigners could NOT withdraw U.S. dollars, only Argentines. Huh. As we were leaving the building, a security guard said to us, “Listen, I think there’s a bank around the corner…”

 

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We promptly gave up.

One of the sad effects of the blue dollar (aside from knowing you’re getting cheated by the banks) is that U.S. dollars have become very rare. Because the government’s exchange rate can’t be trusted, people are looking to convert their money into currency that is more stable. In turn, banks are hoarding their dollars so there won’t be a run on them.

 

So, what to do? Travel to Uruguay for its better exchange rate was one (extravagantly burdensome) option. Having people mail dollars to us was out of the question because apparently, the mailing system can’t be trusted, either. We can’t use the money changers because they only buy dollars. Currency exchanges would give us dollars at the 5 pesos: $1 rate (or worse, not including their fees). We finally settled for using Xoom, a wire transfer agency, which uses a 7 pesos:$1 rate (not great, but at least it’s not 5-pesos).

 

The cherry on top: Argentina is suffering from inflation, too. It provides small comfort, knowing that you’re getting shafted in any case, whether at a 5-, 7- or 8-peso rate. Case in point: Consumer goods. Converse shoes are about $52 on Amazon.com (although I have bought a brand-new, authentic pair for $20. I am that good at bargain shopping.) In Buenos Aires, I have seen them retail for 385 pesos; at a 5.5:$1 exchange rate, that’s $70. Basic handbags (neither that cute nor with a brand name) are sold at 750 pesos and up. At the 5.5 rate, that’s $136, and even at an 8-pesos rate, it’s still a hefty $93.75.

The one item I have seen worth it’s price: the soft-serve ice cream dulce de leche “cono” (cone) at McDonald’s. (You can also get it swirled with vanilla, my fave). It’s creamy, it’s flavorful (its sweetness is offset by only the faintest hint of burnt sugar), it’s thoroughly delicious. And at only 5 pesos, it’s a deal (maybe the only one) at any rate.

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