Return of the "Mercado Paralelo"

When I visited and lived in Buenos Aires in the early to mid-1980s, changing money was a nightmare, as out-of-control inflation – sometimes exceeding 50 percent per month - undercut the peso ley and its successors, the peso argentino (pictured above) and the austral (pictured below). With their currency depreciating rapidly, Argentines fueled the fire by spending their paychecks immediately on durable goods like automobiles that held their value, and by purchasing dollars.

That lasted until President Carlos Menem’s “convertibility” policy, implemented by Economy Minister Domingo Cavallo, fixed the new peso at par with the dollar in 1991. In the interim, it was a “Wild West” for currency traders who respected official exchange rates in public but made their profits in a behind-the-scenes mercado paralelo, the most common euphemism for the black market.

For Argentines and foreigners, purchasing or selling dollars at the official rate would have been economic suicide, but changing on the black market had its own risks. In the days before ATMs, I carried a relatively small amount of US cash and a larger amount of travelers’ checks (which were a bureaucratic nightmare to cash even at official rates) for safety.

Just about everybody in Buenos Aires knew somebody who knew somebody who had a connection to a backroom moneychanger, but it was hard for foreigners who had few or no Argentine friends. The way it worked, that person gave you a phone number and, when you called, an anonymous voice would ask how much you wanted to change. That person would then give you an address and a time to meet.

At that address, at the time indicated, you would ring the bell and enter an office furnished with nothing more than a table and chair. The meeting was perfunctory – hand over the dollars, sign the travelers’ checks, and take your australes. Obviously, such a situation could have been a setup, and we never felt totally comfortable. In our case at least, we were never even cheated (though they paid less for travelers’ checks than for cash dollars).

The mercado paralelo reappeared after the economic meltdown of 2001, when arbolitos (street changers, so called because they were planted in one spot like a street tree) made their appearance in La City, as the Buenos Aires financial district is known. Despite a massive devaluation, that peso has survived, but the mercado paralelo has once again reappeared, fueled by the exchange controls imposed by the government of President Cristina Fernández de Kirchner.

I probably won’t be back in Buenos Aires until early next year, but my friend Nicolás Kugler has provided an on-the-ground update: “Apparently arbolitos vanished once the government set more strict controls, and a sort of tax police started to wander around the banking district. I guess the mercado paralelo now is physically less obvious than the 80s one, but their rates are shown by some newspapers (not the pro-Kirchner ones) occasionally. I can imagine in the near future a government ban on reporting exchange rates, as they did with inflation.”

“Anyway,” he adds, “this city was built on contraband, so happily the people's will will prevail. As I understand it, for the ordinary citizen (including tourists) there is no other way to exchange dollars other than the official market with all its regulations, unless one knows someone who does that in a cueva (not necessarily a dark room, it could also be a travel agency).”

I had never heard the term cueva (cave) used to describe a place where clandestine exchanges take place, but I find it very evocative. It is not, he says, a traditional lunfardo (local slang) term, but it "has traditionally been referred to as any place for hiding, and with such meaning it adapted very well to the local financial world."

For what it's worth, the official rate stands at 4.29 pesos to the dollar, while the parallel rate recently dropped from five-pesos-plus to 4.75, pleasing the government in its "day to day fight against their axis of evil."

Paine in Winter

I have never visited Torres del Paine in winter – though I once experienced a whiteout snowstorm in mid-summer. Recently, though, I received a message from reader Steve Behaegel, of Merelbeke, Belgium, with a link to his blog detailing his own winter hiking trip on the “W” route. The photographs accompanying the entry are stunning, and his advice to winter hikers is well worth reading.

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