We have a joke in Argentina that when God was creating the nations of the world he gave them all two virtues. France, for example, got wonderful food and avant-garde fashion. Italy received historic monuments and fast motorcars. Saudi Arabia was gifted oil and sand, and so he rattled through the countries. However, when it came to Argentina, God handed them huge fertile plains (the pampas are about the size of France), immense Andean mountains full of minerals (including the highest peak outside of the Himalayas), the third largest body of ice after Antarctica and Greenland, huge oil fields (the first entirely public-run oil company was Argentine), and the list went on for some time. When St Peter questioned if God was being too generous for just one nation, he replied “Don’t worry, I’m also giving them the Argentines”.
Lighthearted humour, of course, but it is perhaps also a true reflection and goes some way to highlight how poorly managed this formerly wealthy region of the world is. In this article, I’ll show how this came to be, and give you some insider tips on how best to manage your money during your trip.
A brief history of the Argentine economy
From the turn of the 20th century – when the agro-export model was fuel to this burgeoning country – until the middle of the century, Argentina’s economic wealth was incredible. Wheat, corn, lamb and beef were processed locally and shipped to feed the world’s growing cities.
Taking note, workers fled their poor, war-stricken European homelands to seek a better future in the Americas. Consequently, a lot of families were split up, with some members heading to New York and others to Buenos Aires. Immigrants would step off their ships in La Boca – today’s colourful tourist district where the tango dance was born in the brothels – and be given nationality documents and a well-paid job in a factory or elsewhere.
This was the golden era of Argentina when the future was bright and colourful. Not many people know that Aristotle Onassis made his first million dollars in Argentina, his adopted country, in the 1930s.
By contrast, the second half of the 1900s proved to be full of turmoil. Juan Domingo Peron’s polemic presidencies played out whilst he was living the life of luxury, Evita at his side defending the poor. Numerous bloody military coup d’états coincided with huge international lending sprees and bouts of hyperinflation. Not forgetting, of course, the extreme neoliberal monetary policies of the 1990s, when the entire country was essentially privatised. By 2001, this has culminated in the largest IMF default in history – in simple terms, they didn’t pay off their loans.
Attempting to understand the reasons behind the country’s boom-bust cycles and its justifications or excuses has become somewhat of a national sport in Argentina. It still perplexes the majority of Argentinians, myself included. Having spent half of my life living there, I’m still none the wiser!
The faded glory of the capital
The evidence is all around when you stroll the streets of Buenos Aires. Recoleta, the area known as Little Paris, is lined with majestic mansions from a wonderful bygone era. Nowadays many are embassy buildings or museums. The rich landowners lived here in all their pomp, and boy can you see it.
Today’s Museum of Decorative Art is a wonderful testament to this moment in history. It is reminiscent of New York’s Frick Museum and is highly evocative and decadent, only with fewer paintings on show. Other must-sees are The Ateneo Grand Splendid, one of the most spectacular bookstores in the world, and of course the Teatro Colón, which is Argentina’s epitome of Belle Époque and considered one of the best opera houses in the world.
The Metro/underground/subway system in Buenos Aires also pays interesting homage to the past glory of the country. To think this transport system was built before its equivalent in Madrid seems bizarre. It’s worth checking out the original stations from Plaza de Mayo to Congress to marvel at the feats of engineering pioneered over a century ago when they were built.
Finally, no nostalgic tour of Buenos Aires would be complete without a coffee at Café Tortoni on Avenida de Mayo, or the lesser-known Las Violetas, which is further along the Metro A-line at Castro Barros and happens to be my favourite place in the world for delighting in cake and a coffee, not far from where I used to live.
If you have some time in Buenos Aires during your adventure, why not check out some of these spots to get under the skin of the city’s history?
What’s happening now?
The 21st century has seen certain political stability as the battered economy piggy-backed on China’s monumental growth, and a golden age for Argentine foreign tourism was driven by a depleted peso. Swathes of travellers began to discover worldly-singular sights such as the Perito Moreno Glacier and the Iguazu Falls, two spectacles that no visitor to the country should forego. Visiting Patagonia in the 1990s was like heading to Switzerland on vacation as far as your wallet was concerned.
Inflation was largely stable up until about a decade ago when things started going adrift. This was primarily due to the huge institutional public overspending, fiscal imbalance, and the endless printing of pesos without sufficient hard currency to back it in the central bank. The lack of trust in the Argentine economy has resulted in significant capital flight and it’s not unfounded. With political meddling in financial and statistical institutions and a vast informal economy, this supremely rich nation finds itself needing to control its US dollar reserves and has imposed strong restrictions. These controls mean that any Argentine wanting to purchase US dollars needs to have transactions authorised by the bank, which can be a very complex process.
If an Argentine uses their credit card abroad, they must pay 70% in taxes alone, on top of the purchase value. Imagine travelling from the UK to the US and paying $170 USD for a pair of trainers/sneakers that cost $100 USD in the shop! Businesses that rely on importing goods from outside of the country have been severely hit as these restrictions significantly limit the productivity of any business trying to operate in a way that most people would consider ‘normal’.
So, with inflation currently touching 70% according to The World Bank, Argentines earn about $10,000 on average. But how much is a dollar actually worth in Argentina?
You may find it interesting to know that:
- All middle and upper-class Argentines save US dollars in cash, usually stashed away in a bank deposit box, or a suitcase somewhere safe.
- Property is bought and sold in US dollars cash given that credit is virtually impossible to come by. This means that purchasing a property usually involves each and every bill being counted out on a large table when both parties are signing the deeds/contract.
- Anyone who has the opportunity will open a bank account in Uruguay, the USA, or elsewhere where they can keep their savings safe.
- Most jobs will involve some of a worker’s wages being paid ‘cash in hand’ or not declared, so as to avoid paying tax. This is institutionalised and very common.
Not all dollars are created equal
As a visitor to Argentina, you will find all sorts of different rates of exchange for foreign currency, notably the US dollar (USD), which is not to be confused with the Argentine Peso ($). This shifting of currency rates is caused by the government intervening to ‘protect’ the official rate of exchange by charging levies on all foreign currency transactions against what its informal value is.
Given the various applications of the inordinately complex tax system, you’ll find numerous ‘types’ of dollars all with their unique type of exchange, due to the levy that is imposed. Some of the more common rates are Dolar Soja (Soy) if you export grains, Dolar Netflix if you pay for the online streaming platform, and Dolar-Free Shop if you purchase tax-free goods when travelling abroad – not to mention ‘Liqui’, ‘Bolsa’ and ‘Crypto’, all based on different financial transactions, and the list goes on!
When black is actually blue
The benchmark for foreign currency in Argentina is the Blue Dollar Rate – what the greenback is worth on the street to you and me – with the term ‘Blue’ likely coming from the blue chips in poker being the most prized pieces, although other speculations exist.
Almost all establishments in Argentina will accept the US dollar at near this rate, which at present is approximately double what its ‘official’ value is. If you were to search online for the blue dollar rate you’ll find the value of this highly fluctuating rate. It’s not just the dollar that is ‘blue’, you can also find rates for ‘Euro Blue’ or the ‘Real Blue’ if you’re paying in Brazilian currency.
How you can take advantage of the Blue Dollar rate during your trip
Official money exchange establishments such as banks will only offer you the official rate of exchange. They typically take ages to process this exchange and require you to show your passport, but thankfully for tourists, almost all other establishments will accept your crisp and new US dollar bills.
If you want to exchange a large number of dollars in cash there are Cuevas – literally meaning caves – that will exchange for you at a near-blue rate. These Cuevas take many shapes and sizes. It might be a shoe shop or a mobile phone repair store, and they can also change money for you informally.
Tour agents on many high streets, as well as hotel reception staff, will happily accept your foreign currency from you, but you will need to be vigilant for fakes. Ask them to count the money in a machine, which checks for false bills or you may need to go bill by bill to make sure.
Fortunately for most tourists, you are unlikely to need to change many US dollar bills, as when you pay for a meal in cash you’ll be given some pesos as change and can then use these notes for smaller payments. This will mean you’ll avoid the possibly intimidating experience of being taken into a small Cueva office somewhere, to lay out your cash and hope you get the correct Argentine bills in exchange. Money exchangers on the street, especially Calle Florida in downtown Buenos Aires, are not to be recommended for the obvious reason that you don’t know if you’ll be given false bills or not.
My top money tips for Argentina
1. Don’t rely on ATMs or credit cards, the fixed fees are quite high and machines only expend local peso notes, so you’ll need to bring all your foreign cash with you from home and make sure you keep it safe whilst travelling.
2. In early 2023 the Argentine government reached an agreement with credit card companies to allow foreigners to pay for goods and services at approximately the blue rate. At present this represents a safe and efficient way for tourists to take advantage of the beneficial exchange rate. That said, you should be ready to use cash if circumstances change: if there’s one thing the history of Argentina teaches us it’s that the economy is predictably unpredictable.
3. We do not recommend relying solely on Western Union or other money-wire companies to send you cash for you to collect on your trip. Given the significant lack of foreign currency throughout the country, you’ll only be given cash in Argentine pesos and there will likely be limits to how much cash can be obtained per transaction, albeit the exchange rate will likely be favourable and close to the blue rate. This will result in you wasting time going to different Western Union offices trying to procure your cash and a considerable amount of stress (we’ve have had reports of people waiting two hours to receive cash at the El Calafate Western Union).
4. Confusing the Argentine peso symbol ($) with the US dollar can be costly. Be aware that they are the same and pay attention. Interestingly, the old Spanish nomenclature for pesos may well have been abbreviated in colonial times to PS, which, when superimposed, evolved to become the $ symbol we all recognise, yet interpret slightly differently.
5. When paying cash in either US dollars or euros, ask what the rate of exchange is before paying, making sure you understand the differential rate you’re being given.
6. Pickpockets know that tourists will likely carry more cash, so be particularly careful in Buenos Aires and other major cities, and always leave your valuables locked away in the hotel safe.
Money is unlikely to be what you remember most about your adventure in the years to come, but understanding the culture, history and process around it will help you plan accordingly and have a worry-free experience when travelling.
If you’ve found this interesting and would like to delve a little deeper, I would recommend reading A Short History of the Argentineans by Felix Luna. As always, travel safe and enjoy your adventure!