Wednesday, August 15, 2012

Subte Strike Ends; Uruguay's Peso Market

Yesterday, finally, a tentative truce ended a ten-day Subte strike that had paralyzed the city of Buenos Aires. Contentious labor relations are not unusual in Argentina, but this one was more complicated than most, as it involved an ostensible devolution of power from the powerful federal government (which controlled the system) to the city government (a political adversary) without providing sufficient funds to run the system. This obliged municipal authorities (headed by mayor Mauricio Macri) to raise fares substantially to try to reduce the operating deficit.
A good part of that operating deficit involves wages to Subte workers, but that’s more complicated than usual because those workers, seeking wage hikes to keep their living standards from eroding under an estimated 25-percent inflation, are divided among themselves. One group, under teamster leader Hugo Moyano – who can make the late Jimmy Hoffa look like a romantic idealist– was able to come to terms with Macri but alienated a separate group of so-called “Metrodelegados” loyal to President Cristina Fernández de Kirchner, with whom Moyano and his supporters have fallen out.

The public, meanwhile, grew indignant as they tried to get to their jobs everyday by surface transportation over streets clogged with buses. One of my nephews, who just had knee surgery and is on crutches, found that his usual 20-minute Subte commute from semi-suburban Belgrano to downtown Buenos Aires took him 2-1/2 hours by bus.

For the moment, at least, the blame game has subsided and city commuters are returning, slowly, to the system – though apparently the Metrodelegados left many of the subways cars covered in graffiti and stickers. Given the political stakes, with Macri interested in running for president in 2015 and the president asserting her authority (a constitutional prohibition on re-election hasn’t stopped anybody from trying in the past), the issues involved are not likely to go away.

Peso(s) in Uruguay
As a relatively small buffer state between the giant Brazil and the large-enough Argentina, Uruguay has always had to make compromises with its imposing neighbors (when not being occupied or intimidated by them).  It’s also been a country notable for its political and economic stability in a region that’s been notorious for their absence.
Many visitors to Argentina and Buenos Aires hop across the River Plate to visit Uruguay, whose coastal strip from Carmelo east to Montevideo and Punta del Este gets extensive excursion coverage in my Moon Handbook to the Argentine capital. The official currency is the stable Uruguayan peso, but most local merchants readily accept US dollars, Brazilian reais, and Argentine pesos as well (the photo above is a couple years old, and the rates are no longer current).

The latter, though, is becoming more problematical as the differential between Argentina’s official and black market exchange rates widens. According to the Buenos Aires daily Clarín, restaurants and other services in Punta del Este have said they will accept Argentine credit cards at the official exchange rate (about 4.60 Argentine pesos per US dollar), but will only accept Argentine cash at the black market rate (around 6.20 Argentine pesos per dollar). Even non-Argentines crossing the river to Uruguay this coming summer will find it disadvantageous to try to dispose of excess Argentine pesos there.

Tango by the River
There’s been a change in schedule. I will still give a digital slide lecture on Buenos Aires at Tango by the River in Sacramento, but it has been postponed until Friday, September 21st, at 6 p.m.
Limited to a maximum of 50 people, the event will also include tango performances; admission costs $10, or $8 in advance. I have spoken here several times before, and we always sell out, so plan in advance. Signed copies of my Moon Handbooks on Argentina, Buenos Aires, Chile and Patagonia will be available at discount prices.


Andrew said...

This leads to the thought whether someone who wanted to purchase Argentina pesos at the unofficial rate could do so safely at a cambio in Uruguay. Of course, you might have to do it through two transactions (USD -> Uruguay pesos -> Argentina pesos). Based on the rates above, the buy-sell spread is pretty large, so it might not be worth your while.

Wayne Bernhardson said...

Probably not, Andrew, because in theory at least the Argentine central bank is obliged to buy their own pesos back at the official rate. You might be able to sell your dollars directly to visiting Argentines, though.

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