Currency is a fickle affair in Argentina; inflation raged at more than 40% in 2014, and since the government has limited the amount of dollars Argentines can buy from banks, pesos are readily exchanged for dollars on the ‘blue market’ for around 60% more than the official exchange rate, which is very good news for visitors.
Clandestine exchanges are made in unlicensed cuevas around the city. You wont find them advertised, or they would be shut down immediately, and many hotels are forbidden from disclosing their locations to guests. But ask around and you will find someone who knows of one. Alternatively you can sniff one out yourself.
That’s how I find myself standing in a ladies clothes shop at the back of a quiet mall on a Tuesday afternoon, negotiating with a man who looks like the Argentine equivalent of Boycie from Only Fools and Horses.
The blue market has become such an important source of cash dollars for Argentines, who are only allowed to convert 10% of their monthly salary into the more stable American currency, that the daily blue market exchange rate is recognised by one of the country’s leading dailies, La Nacion, which publishes both the official and the blue rate on its homepage (top right – ‘Dolar hoy’).
The official rate is fixed at around 8.56 pesos to the dollar, whereas the blue rate is usually around 13.30.
Change a US$100 bill for pesos at the airport or a bank and you’ll walk away with AR$850, and you will need official identification and a lot of patience to do so. Find a cueva and you’ll take home AR$1,330, at today’s blue market rate, and that buys you a lot more malbec.
Like any clandestine exchange, there is always an element of risk involved in using a cueva. Unless you are extraordinarily good at identifying counterfeit foreign currency, you have no way of knowing whether you are being ripped off or not. There’s also the chance that the entrance to the cueva is being watched by unwelcome eyes.
The easier and more popular option is to visit Calle Florida, a pedestrian shopping street that’s more hellish to walk through than Oxford Street on a Sunday before Christmas. Florida is lined with touts yelling cambio (change) in English and Brazilian – you can’t walk more than five paces without being heckled.
Personally I’d give this a wide berth, not only because of the relentless torrent of humanity that seethes through the street, but because I think you’re more likely to be ripped off by someone of un-fixed address than someone based in a shop. Also the likelihood of being spotted by an opportunistic thief on a busy shopping street famed for its cambios seems greater than at a non-descript mall.
In return for three crisp US $100 notes, Boycie hands me a thick wedge of cash divided into several stacks of AR $100 notes, which are counted and then distributed around my person. I have no way of knowing if the bills are fake – he assures me they aren’t, obviously – so we shake hands and he flashes me his business card and a winning grin.
I’ve been back to Boycie three times since then, and so far, none of the AR $100 notes he has given me have been rejected.
It’s not only tourists who need the cuevas. Inflation is so high that Argentines would rather lose out on an unfavourable exchange rate so they can stuff dollars under their beds and pack them into the backs of closets, happy in the knowledge that they will retain a relatively high value, whatever the national currency does.
Aregentines are well-versed in the unreliability of their own currency. In 2001, a flailing Argentine government was forced to de-peg the Peso from the American dollar. The value of the peso plummeted, and people’s life savings quickly became worthless.
To make things worse, the government closed down the banks, so people couldn’t even withdraw their savings and spend them on goods that were becoming more expensive by the hour.
Sadly, the same thing seems to be happening again.
Since Argentina defaulted on its 2014 IMF debt repayments, it has been denied credit by international lenders and commodities suppliers. The only way to purchase goods is with hard currency, which in the world of global trade, means dollars.
Ergo the restrictions on the number of dollars Argentines can buy; ergo the mass inflation.
The government has repeatedly denied the claims of unsubstantiated inflation, although at the end of 2014, it sheepishly conceded a underestimated inflation rate of 25%. A multitude of independent economists, believe it is more like 40%.
Companies are only obliged to adjust salaries at the official rate, which means that normal people are distinctly worse off than they were in 2012.
They haven’t quite shut down the banks yet, but with 10 months until the next election and public coffers running worryingly empty, it’s anyone guess what will happen next.
In the meantime, cueva operators are sitting pretty, and I’ve got a chunk of cash in my pocket that’s considerably more than the government wants me to have. Let’s hope they’re not reading this; we’re in it together now, Boycie and I.