Sep 09

Not adjusted for inflation; Argentina’s black market currency

by in Argentina

Black market money changer looks for U.S. dollars on Avenida Florida in downtown Buenos Aires, Argentina. Hyperinflation and manipulated statistics by the Argentine government has caused the U.S. dollar to sell for nearly twice the official exchange rate | photo by brandon c janes iv

Black market money changer looks for U.S. dollars on Avenida Florida in downtown Buenos Aires, Argentina. Hyperinflation and manipulated statistics by the Argentine government has caused the U.S. dollar to sell for nearly twice the official exchange rate | photo by brandon c janes iv

BUENOS AIRES – Argentines have long been known for their passion for wine, steak and tango. But the object of desire lately has been the U.S. dollar, which sells for about double the official exchange rate on the black market here.

One brief stroll down Avenida Florida in downtown Buenos Aires and you will hear a veritable Palestrina of shady black-market money changers singing, “Cambio, cambio caballero, cambio,” in a thousand different tones.

The Argentine government has imposed stiff regulations on trading with U.S. dollars here – an anti-U.S. policy, characteristic of the populist Argentine Presidenta Christina Fernández Kirchner.

Venezuela also has such a policy, which is meant to keep money inside the country and steer investors back home.

It doesn’t help that the Argentine peso – which officially exchanges for AR$5.7 to the dollar – is worth less than half of what it was five years ago.

Strapped for cash, I sold a U.S. $100 bill on Avenida Florida this weekend for $940 Argentine pesos – nearly twice the official exchange rate. The official rate is what you pay at a bank, ATM or with a credit card.

Black market boon for newstramp? – not so much

It doesn’t take long for the thrill of doubling your money in 30 seconds behind a magazine kiosk to wear off, when you realize shortly that the market beat you to the punch.

I spoke with several Porteño merchants in this port city on Sunday, who told me that most every business in Argentina fixes its prices to the AR$10-to-US$1 exchange rate – regardless of what the government tells them.

Such a revelation gives you an idea of how far the ripples in the local economy go.

Most every aspect of Argentine life is disrupted by the country’s false currency figures, said Carlos Gonzales, a salesman in Buenos Aires’ San Telmo neighborhood.

A common complaint is that, when Argentines want to travel abroad, obtaining foreign currency is nearly impossible. As a result, many purchase U.S. dollars or Euros on the black market (from guys like me) but have to pay double the price.

“I have relatives in foreign countries that I can never go visit because I can only get a couple hundred dollars,” Gonzales said. “What can I do with $200? Nothing.”

The noble lie

A January article in the Economist magazine titled, “Don’t lie to me Argentina,”  called the Argentina’s inflation coverup an “extraordinarily elaborate deception.”

For some Argentineans, their government lying about its currency is a metaphor for Kirchner’s presidency and party politics; For other’s it is more forgivable.

Laura Paris, who co-owns a mate company in Buenos Aires, said that she likes “Christina” and her policies – just not the currency fiasco.

“Sure, she makes mistakes, just like every president of every country, because there are things that you have to solve diversely,” Paris said. “I like to live in this country because anyone can find work if you have the drive, and other parts of the world aren’t like that.”

Comparison’s between Kirchner and Eva “Evita” Peron have been made.

Cristina Fernàndez Kirchner, presidenta of Argentina

Cristina Fernàndez Kirchner, presidenta of Argentina

Friends, foes

As the shop owners and I discussed money and the actions of Argentina’s liberal presidenta, the word “Chavismo” inevitably came up.

Kirchner’s presidency, along with that of Bolivian President Evo Morales, Ecuadorian President Rafael Correa and the life-after-death policies of the late Venezuelan president Hugo Chavez all have shown a focus on helping indigenous and poor in their respective countries – so called populist ideals.

Evita’s husband, Juan Domingo Peron, who was the 29th and 40th president of Argentina, was considered a populist.

According to an August report by Merco Press, a south atlantic media agency, money drawn from the Argentina’s Central Bank to support social programs during the Kirchner administration has greatly devalued Argentina’s currency. The article also predicted that the country would fall into depression in 2014.

Jorge Panzar, a semi-retired businessman from the south of Argentina and a member of the opposition, said that the country’s currency problem was a result of a big ego on the part of the politician in power.

“It is pride,” he said. “She values only herself, and for the rest of us, we have to pay.”

Photo courtesy of Wikipedia

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2 Responses to “Not adjusted for inflation; Argentina’s black market currency”

  1. From Chaison:

    Interesting article and I like the marionette, it is a great way to conclude the video.

    Posted on September 9, 2013 at 8:02 am #

Trackbacks/Pingbacks

  1. A culture of secrecy: Argentina's history of corruption remains unchecked | Newstramp - September 11, 2013

    […] the true rate of the country’s hyperinflation over the past few years, see Monday’s Not adjusted for inflation: Argentina’s black market currency, is a good example of how a lack of access to government information permits blatant lying by the […]

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