In recent years, there has come a time when a visitor to Argentina suddenly learns that he could have gotten a lot more for his greenback if he had brought cash to buy pesos on the unofficial market.
A dollar would buy twice as many pesos in casual changes of money as the amount in pesos that it would download when buying groceries with a credit or debit card covered by the official exchange rate.
“You can almost hear the blood gushing from their voices when they realize it,” said Jed Rothenberg, owner of a firm specializing in Argentina.
This should, at least in theory, be a thing of the afterlife from Friday. The government brought new regulations that allow visitors with credit and debit cards to get more pesos than the official rate.
On Friday, one dollar was officially worth 157 Argentine pesos. But in the unofficial market, commonly known as the “blue dollar”, it can be worth up to 285 pesos. And in the formula that will now be used through credit card operators, it is at 292.
Investors in informal currency have more ubiquity after strict capital controls were put in place in 2019 in an effort to protect the local currency from a sharp devaluation amid peak inflation in the country.
The government hopes the new rule for credit and debit cards will discourage cash transactions that make cash-laden tourists more vulnerable to thieves, and also, at times, deprive the government of sales taxes that are ignored if there is no electronic trail.
Rothenberg has sought for years to explain Argentina’s other exchange rates and the difficulties tourists face in using credit and debit cards. He didn’t make it.
“The vast majority of other people are just confused: ‘Does it mean more than one exchange rate and one of them can constitute a difference of two or even three digits?'” said Rothenberg.
The new rule probably wouldn’t do much to lessen the confusing complexities. This adds another exchange rate to the more than 10 that already exist in Argentina, a formula that makes it only say how much a peso is worth.
The government also imposes other taxes on converting foreign currencies based on their use, leading to rates that have familiar names like the “Qatar dollar” for travelers (a reference to the World Cup), the “Netflix dollar” for streaming. services and the “Coldplay dollar” for ebook of foreign artists to play in the country.
The explanation for why no one can say how much a peso is worth is because “anything else is worth to each person,” said Martin Kalos, an economist and director of Epyca Consultores, a local consultancy.
“The government has segmented the market. There is no single value, there are costs depending on who you are or what operation you have to do,” he said.
The purpose of the government is to have a more powerful peso to pay for the country’s imports in the hope of preventing the increases in value from getting worse. The economy registered an annual inflation rate of 83% in September.
Fernandez’s management is “implementing interim measures, or adequate measures, because he has elections within a year” and any effort to correct those distortions would most likely cause economic hardship that would cost the polls dearly, Kalos said.
Argentina has gone through so many currency crises in recent decades that its citizens distrust their currency, so those who earn enough to save do so in dollars or euros.
Even economically savvy Argentines are confused.
Anyone who has not earned government subsidies or who disagrees with certain money markets can buy up to $200 per month but will have to charge an additional 65% tax at the official exchange rate.
Argentines who pay for their purchases in foreign currency with their credit cards pay a premium of 75% over the official rate. But that’s as long as they spend less than $300. Si spend more than the month, the surplus increases to 100%.
Argentines can also buy dollars in money markets by buying and selling bonds or stocks, and pay a peso similar to that of the casual market. That’s the formula credit card processors will have on Friday.
Experts said they want to see how the new guest formula is implemented before knowing if it will succeed.
But if implemented well, Rothenberg said the replacement could be a boon for tourists.
“They just use their credit card, they don’t care about the details,” he said. United States and Europe. “
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