It’s been several months since I wrote about exchange rates, which are an ongoing issue in Southern Cone countries, especially Argentina. The official exchange there is hovering a bit above nine pesos, but the so-called “blue rate” – a euphemism for the black market – went above 15 last year.
What will happen next is anybody’s guess. As I traveled in Patagonia, for instance, it was hard to get even 12 pesos per dollar, but the trend has reversed itself. In the first instance, a crawling official devaluation has taken the pesos from 8.5 per dollar when I arrived in Buenos Aires last November to 9.17 pesos this morning.
Meanwhile, the blue dollar has reversed a recent slide. According to the Buenos Aires Herald, the dollar has risen because of government pressure on cuevas (informal exchange houses) and, today, the rate of 15.09 pesos is the highest it’s been since last October. In the past month alone, it’s risen by 11.5 percent. The Herald attributes that to the beginning of winter holidays, when more Argentines travel abroad, but I think that’s an incomplete analysis.
In reality, the political factor may be stronger. While Argentine President Cristina Fernández may be economically inept, she’s politically astute and has placed her acolyte, Buenos Aires Province Governor Daniel Scioli, in a strong position to succeed her in this year’s elections (after two full terms, Fernández cannot succeed herself). Many of Fernández’s supporters do not trust Scioli, but Fernández has managed to maneuver one of her own favorites, Carlos Zannini, into the position of Scioli’s running mate.
Meanwhile, in the city of Buenos Aires, Horacio Rodríguez Larreta eked out a narrow victory to succeed Mauricio Macri as mayor. Rodríguez Larreta was the hand-picked successor of the conservative Macri, who has long held presidential ambitions, but the race’s closeness suggests that Macri could have more serious problems in the provinces, where candidates from the capital traditionally run weaker.
A Scioli victory over Macri would mean continuity, at least in the short term, for the clumsy foreign exchange controls implemented by the Fernández government. That, in my opinion, has also contributed to the peso’s weakness and is likely to continue to do so. Still, Argentine politics is so unpredictable that I hesitate to make any definitive statement. I will say that it’s likely to be some time before foreign visitors will be able to use Argentine ATMs freely without paying a penalty, but it would be nice if a new government would create larger banknotes than the 100-peso note pictured at top (worth less than US$7).
Meanwhile, Across the Andes
When I arrived in Chile in early February, the free-floating peso was around 630 per dollar in a country with no arbitrary exchange rules. It’s had some ups and downs since then, but currently stands at 645 to the dollar. Relatively stable prices and the convenience of using ATMs make Chile a more comfortable place to travel, at least in terms of money issues. Chile also has larger banknotes than that pictured above (worth about US$8). The 20,000-peso note is worth about US$31, so your wallet is less unwieldy there.