Argentina Lifts Currency Controls – Dolar Blue Gone For Now?


Traveling to Argentina has been “exciting” for the past few years because of the parallel Dolar Blue market that begin due to the currency controls introduced by the government thrown out last week.

Argentina Dolar Blue

Argentinians wishing to get hard currency had to rely on unofficial markets to buy them and tourists could get anywhere from 50% to 100% more pesos per USD this way (and save a lot).

You can access Bloomberg’s article about currency control lift here of which below is an excerpt:

Argentina’s peso tumbled as much as 30 percent as newly inaugurated President Mauricio Macri fulfilled his campaign promise of letting the currency float freely.

Macri’s push for a devaluation was a key part of the economic overhaul he says is needed to lure investment that can jump-start an economy suffering from lackluster growth, inflation estimated at 25 percent and a shortage of dollars. The decline brought the official rate closer in line with where the peso had been trading in unregulated markets.

The peso weakened 29 percent to 13.89 per dollar as of 12 p.m. in Buenos Aires on the MAE electronic trading platform. On the black market, which Argentines used to skirt the controls that limited their ability to buy greenbacks, the currency had most recently traded at about 14.6 pesos per dollar. Three-month non-deliverable forwards gained 1.5 percent to 14.87 pesos per dollar.

Morgan Stanley estimates that quick devaluation of the peso may lead inflation to accelerate to 35 percent in 2016. Economic growth, which has been largely stagnant the past four years, is expected to expand 0.6 percent in 2016 before jumping 3.6 percent the following year, according to the median estimate of 20 economists surveyed by Bloomberg.

Argentina Dolar Blue Chart


Argentina has faced runaway inflation with ever increasing consumer prices that the previous government tried to hide by “fixing” the statistics. Currency controls never work because people can go to unofficial markets to do the exchange.

Most international hotels in Argentina price in USD and then use the official exchange rate to convert the price to ARS. This means that there is no longer 30% to 50% discount if the money exchange took place in the Blue market and using credit cards is OK again.

Let’s hope that the new government can clean up the mess left behind by the Peronistas and can get the economy going again. Seems that the inflation, however, will be very high next year as well.

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