The Argentinean Economy

Ok, weird topic I know.  But it's pretty imperative to understand the Argentinean economy before I start posting about my Buenos Aires experience.  Ok well it's not imperative but it's just good to know.

ANYWAY.

Argentina operate a dual-currency model: they have their Argentine Peso but the US Dollar also features heavily in their economy.  The problem with the peso is Argentina's inflation is a whopping 30%.  Can you imagine earning a salary of say $20,000 peso and by the end of the year, your money is worth only $14,000 peso?  How does one save for big ticket items?  Especially when houses/apartments/cars are listed in US Dollars?

As a result Argentines are scrambling to get their hands on USD cash but the government imposed something a few years ago which makes it almost impossible for locals to get USD cash (I'm sure you can google it, I'm not across the details).

So anyway the official exchange rate between USD and ARS (Argentine Peso) is 5.8 to 1.  However the "blue rate" they call it is about 9 to 1.  What this means is when you change your Aussie dollars in Australia to Argentine Peso you get about ARS$5.50 to AUD$1.  But if you take USD cash over to Argentina, you can find people/exchange houses who will exchange your USD at a rate of about ARS$9 to USD$1.  Apparently this blue rate is published in the newspaper but it's technically illegal to exchange money at this rate.  

An option is to just find almost any local and they will be more than happy to exchange USD cash for you.  We were lucky that we were able to exchange unlimited amounts of USD into ARS via my cousin's fiance's (now husband's) family.  However we also did change some with one of our tour guides, and the manager of the serviced apartments we stayed in.  The best rate we got was 9.1 and the worst rate was 8.6.  The actual rate fluctuates every single day and multiple times within the day.  It almost always sits between 8 and 9 though.

One thing to keep in mind though, is to only exchange as much as you think you will need.  If you exchange too much and have leftover ARS, NO ONE will change it back to USD for you (obviously).  Even Aussie currency exchanges will not accept ARS back.

Another thing to keep in mind is if you aren't able to exchange at the blue rate, a lot of restaurants will actually allow you to pay in US Dollars and at a better rate than 5.8 to 1.  Most of the restaurants we saw were happy to accept around 8 to 1.  Some market stalls (run by individuals) are also happy to accept USD at a rate of about 8 to 1 but large retailers won't.  Can't hurt to ask!

What this all means for Aussie tourists is that at a rate of 9 to 1, things in Argentina are cheap.  At a rate of 5 to 1 some things (especially retail items) are as expensive as Australia.

Lastly, as I blog about Buenos Aires, the prices I mention in AUD/USD are at the blue rate because that was the cost incurred to me.  Hope this makes things clearer.  I had NO idea this was going on before I arrived.  I mean I always knew about the troubles the Argentinean economy has been through in the recent history but I had no idea things were this bad.  It's very very scary that inflation is so high.  It means most Argentines have no hope of ever leaving the country or buying decent property.