Wednesday, December 2, 2009

The Chilean Peso, and a New Airline, Soar

Last year, about this time, the dollar was riding high in the Southern Cone countries, having reached a peak well above of 600 Chilean pesos. It was also climbing against the Argentine and Uruguayan pesos, so that traveling in the region was a bargain.

In a year, though, things have changed, especially in Chile. As the country comes out of the economic crisis - deftly managed by President Michelle Bachelet and her team - the price of copper has rebounded and there’s been an influx of dollars into the country. Thus the dollar has fallen below 500 pesos, with the end result that prices have risen by about 20 percent, even though Chilean domestic inflation remains low. Chilean agricultural exporters are complaining, as their domestic costs remain high, but they receive fewer dollars for their fresh fruit, wine, and other products. So are incoming tourism operators, who receive their income in dollars, but have to pay their salaries and other expenses in pesos.

That said, not everything is negative in Chile. The new Principal Airlines is attempting to undercut the established carriers LAN Airlines and Sky Airline on routes to the northern cities of Antofagasta, Calama, and Iquique. How long they may last is open to question - LAN’s resources and services have put several other Chilean airlines out of business over the past couple decades - but for the time being this means potentially cheaper access to Atacama desert attractions such as San Pedro de Atacama (near Calama), the nitrate ghost towns of Humberstone and Santa Laura (near Iquique, which also has some of Chile’s best surfing), and Lauca National Park (in the Andean altiplano east of the city of Arica). Travelers with those destinations in mind may be able to minimize their financial sacrifice.

In Argentina, meanwhile, the dollar has strengthened against the peso, despite a recent minor drop. A year ago, it was at the 3.2 peso level and, today, it’s right around 3.8 per dollar. That’s not to claim Argentina is necessarily cheaper than it was then, as prices of some items such as gasoline and taxi fares have risen - in fact, realistic price rises were long overdue. Yet it’s still possible to find good values in hotels and especially in restaurants, where good meals are available for US$10 per person, and spending a bit more can mean something really memorable - especially in the Buenos Aires gourmet ghetto of Palermo. Even at restaurants, wines are a phenomenal bargain, with full bottles of fine wines available for what, in the United States or Europe, would barely cover the cost of a glass. Those who wish, though, can still spend hundreds of dollars on a truly premium vintage.

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