Before meeting Andres Ruggeri at Hotel Bauen, I needed to exchange money. I was living a high fa’luting lifestyle with my amiga in Recoleta (a fancy neighborhood in east Buenos Aires) so, I’d blown through the five hundred dollars I exchanged when I got here despite the favorable exchange rate. Officially, the exchange rate is 5.74 but the market for dollars is strong so you can sell them for much more.
The desire for dollars is an important political factor in Argentina. The value of the peso has been unstable for years. People are hungry for dollars, especially since the government makes it nearly impossible for people to purchase them. The peso has little value on the international market; so, it can’t be used to purchase imports which are needed for national infrastructure and development. Property is bought and sold in U.S. dollars rather than pesos. Instead of investing their pesos in a bank, people save dollars in teapots and under mattresses. Considering the thousands of dollars and pesos lost during the crisis when people were literally locked out of their bank accounts and many lost their entire life savings, this inclination is understandable. But the thirst for dollars preceded the crisis. Government approaches to currency management have ranged over the years with hyper-inflation at one end of the spectrum and the peso pegged to the dollar at the other (part of a neoliberal package supported by the IMF in the 90’s). During those expensive years, in Buenos Aires a simple white-bread ham sandwich at a diner might cost $32. People would say, ‘in Buenos Aires, you could buy the most expensive sandwich in the world’.
Argentinians remember times during the late 80’s and early 90’s, when stores couldn’t keep up with inflation. The price of goods changed so drastically from morning to night that stores were forced to close their doors. The current rate of inflation estimated at 10% officially, however, the ‘real’ number is supposed to be much higher. Many claim that it is 30% but most concede ‘real’ rates of inflation are somewhere in between the low and high estimates, maybe around 20%. On the international market, the peso has little value. Upon arrival to the U.S. one can’t exchange Argentinean pesos for dollars and the Argentine government makes it difficult forArgentines to buy dollars.
There is a $300 limit on the number of dollars the government will sell to individuals who are about to travel. One has to prove they are about to travel and there is a 20% tax on ATM and credit card transactions in dollars. The government wants to use dollars to build its infrastructure (for example to rebuild the recently re-nationalized oil company) and, therefore prevent them from flowing out of the country into foreign bank accounts. This strategy is understandable from a nationalistic perspective but people feel restricted by the policy. For example, the Peruvian guy who waited on our table last night was about to go home for vacation but the government wouldn’t sell him dollars so he asked if we would sell him 200 for the journey. I only had forty but I exchanged them with him for a rate (just under the blue) of 7/1). So, this demand has created a ‘blue market’ for dollars in which the exchange rate is much higher than the governmental one. On the blue market today, I got 8.7 pesos/dollar. For perspective, a beer at a middle-brow place in El Centro Caballito, like Giribalda the one I’m working in at the moment, costs about 28 pesos and a coffee rings in at 15-20.