Sunday, January 4, 2009

The Argentines are Coming!

For most of the 1990s, with an overvalued peso at par with the US dollar, Argentines traveled abroad just as, over the past decade, US residents bought houses they couldn’t afford. One of their favorite choices was nearby Chile, whose undervalued peso made it a bargain for visitors from across the Andes. Within Chile, one of their top destinations was the Pacific Ocean beach resort of Viña del Mar (pictured here), where their money went farther than it did in their own Atlantic coast city of Mar del Plata.

All this changed in 2001-2, when the Argentine peso collapsed - within a few months it was close to four pesos per dollar - and emergency banking restrictions limited access to their accounts. Only a handful of those Argentines who could afford vacations could travel to Chile, much less overseas. In fact, over the ensuing six years, the flow of tourists reversed and the province of Mendoza even invited Chileans to celebrate their mid-September patriotic holidays in Argentina. In a sense, this was the “revenge of the Chileans” after a decade-plus of summertime invasions from Argentina.

Once again, though, the situation has reversed itself as, since March and April, the Chilean peso has fallen from roughly 430 per dollar to
630 per dollar - nearly 50 percent. The exchange rate once again favors Argentines, though how long this may last, given Argentina’s own economic problems, is a separate issue. According to the Chilean daily La Tercera, this is the world’s sixth-greatest devaluation in this period, though their article calculates the percentages with appalling inaccuracy.

According to Mercopress Noticias, the Chilean state tourism authority Sernatur expects 150,000 Argentines to visit Viña in January and February, though other destinations, such as the Andean lakes district around the towns of Pucón and Puerto Varas, should also get increased numbers. Visitors from Europe and North America should also find their currency going farther, and the Chilean tourism sector is rejoicing - with income in dollars, and expenses in pesos, not to mention increased numbers drawn by the bargains, their earnings will go much farther this season.

The Tercera article suggests that the exchange rate for the foreseeable future will fluctuate between about 620 and 660 pesos - good news for both operators and visitors.

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