Mind on my money, money on my mind / Tryin’ to stack paper, countin’ every little dime / Down to the penny, holla if ya hear me
Don’t worry, this post won’t turn into me talking about sippin on gin and juice. It will turn into me talking about how much money is on my mind.
By being an Ambassadorial Scholar, I am given a LOT of money to live abroad for a year, especially in Argentina. No matter where you choose to study you get the same scholarship amount, so those who study in England tend to run out of cash a little bit faster than us in Argentina. To give you an idea, my tuition was $900 USD. For a graduate degree.
Anyway, despite having more than enough money for a year in Argentina, there are two different peso/dollar conversion rates here. Let me explain…
Argentina has an official inflation rate of 11.1% — this is the rate the government reports. But economists say that the rate is closer to 26%. Because the value of the peso is unstable, many Argentines used to buy dollars to protect their wealth from inflation. In November 2011, BBC reported that people buying dollars in Argentina “now have to give their national identity and tax number, which must then be approved by the national tax agency (AFIP) before the transaction can go ahead.” Apparently, because people were buying dollars, it led to a lot of tax evasion.
In June 2012, the Wall Street Journal reported, “Argentina’s government has taken to deploying tax inspectors with dollar-sniffing dogs and widely publicizing its busts of street money changers.” Also in June 2012, The Economist reported that , “Since the inflation rate is already over 25%, the government is terrified of letting the peso depreciate. Instead, it is resorting to a siege economy.” According to this website, “The government currently employs different methods to control the exit of dollars including limiting imports into Argentina, limiting dollars available for travel outside Argentina, charging a tax on credit card charges made outside of Argentina and payable in dollars, as well as controlling and limiting payments made to suppliers outside Argentina.”
And according to Reuters in July 2012, “People will be able to buy foreign currency if they are traveling overseas or need to repay dollar-denominated mortgage loans, the central bank said. They can also buy dollars at the official rate to make humanitarian donations.”
So to summarize, at this point it is now basically impossible to legally get US dollars here in Argentina. Almost every product sold in stores here as “INDUSTRIA ARGENTINA” written all over it. And imported products are VERY expensive (imported food at the grocery store, imported clothing like Puma and Adidas, electronics, etc.) — to give you an example, one can of Campbell’s tomato soup costs 40 pesos!
All of this dollar craziness has led to a huge, flourishing, and very illegal black market (also called the blue market). So how do you get pesos here coming from America?
Dolarblue.net tracks the blue market rate for dollars.
Option 1: The green rate (arbolitos) means the men that exchange money on the street in any of the major cities. They stand against a wall in a central area (Florida in Buenos Aires and here just off the plaza) and say “Cambio, cambio” under their breath. So right now it looks like they’re offering up to 8.83 pesos for every USD. In Salta I believe the rate is more like 8.3. But anyway, you need to physically have USD in cash on you if you choose to go about exchanging your money this way.
Option 2: Xoom.
Xoom is offering 7.9135 pesos for every USD. Basically, you go on the website, link up your Xoom account with your US bank account, and type in the amount of USD you want to send to Argentina. Once everything is processed, you go to the local Xoom office (located throughout Argentina) to pick up your pesos. You can send up to $2999 USD at one time. You do not physically have to have this money with you in Argentina, because it comes from your bank account directly.
Option 3. The ATM. The ATMs here accept American debit cards, no problem. If you go to an ATM, you get the official, legal rate.
That’s right. 5.166 pesos to the US Dollar. Plus, every time you go to the ATM you are charged around 20 pesos as a fee for withdrawl. And most ATMs (except for CitiBank) only let you take out 1000 pesos at a time.
So what does all this mean? If I go grocery shopping and spend 500 pesos, here’s what it would look like from all three conversion rates:
So for the exact same amount of groceries, you could spend $56 or $96!
Also, we’re trying to get funding from Rotary in the USA for a project down here, and if they send $10,000 USD and we take it out from a bank we get 51,664.90 pesos. We can’t get the money any other way, because it is literally illegal. But if we could, we would get up to 88,300 pesos! That’s almost 37,000 more pesos to help an indigenous community get clean water!
Hopefully those examples put it in perspective. Those who are anti-Christina (the president here) say that Christina made it impossible to get dollars because she wants everyone to only stay in Argentina, travel in Argentina, and buy things from Argentina. But in doing so, she has created this crazy, crazy black market and the peso has become extremely unstable. When I got here in January, the black market rate was 7.5 pesos to the dollar and in just 3 months it has spiked now up to 8.83!