Argentina In Crisis – Dolar Blue Makes A Return?

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Argentina is facing new challenges as the president’s party lost some elections this past weekend, making it unlikely that he will get a second term.

Dollars

This has lead to widespread selling of Argentinean equities and the currency. Stock market and the ARS (Argentinian Peso) have both dropped 30% to 50% this week.

Currency and stock marker crash:

Here’s an excerpt from the Financial Times (access their piece here):

The sharp move lower in the peso has heightened concerns of a coming debt default, with the odds of such a move within five years remaining elevated at 75 per cent. Four-fifths of the country’s debt is denominated in a foreign currency, meaning any weakness in the currency makes repayments a much more difficult task.

Argentina’s Merval stock index fell about 1 per cent after rebounding nearly 9 per cent on Tuesday after the prior day’s violent move, which saw Argentine equities lose half of their value in dollar terms.

The previous administration’s president Queen Cristina (as locals call her) would be the vice president on the new ticket.

The previous government had currency control in place that allowed black market to flourish in Argentina. Locals couldn’t exchange their cash at the published rates to foreign currency, and had to rely on dealers. Tourists didn’t use their credit cards in the country because those charges would go through at the official rate while black market was paying 50% more.

I have experienced this dolar blue several times in Argentina before it was lifted in 2015:

REMINDER: Exchange Cash Locally In Argentina & Save 33% (DON’T USE CREDIT CARDS!)

REMINDER: Take Cash To Argentina And Not To Use Credit Cards (Dolar Blue)

Argentina Lifts Currency Controls – Dolar Blue Gone For Now?

Conclusion

It is difficult believe that Argentina was one of the richest nations at the beginning of the 20th century, considering the financial mess they have been in for years now.

I truly hope that there won’t be (yet again) parallel currency market that requires us to bring crisp $50 or $100 USD notes into the country.

The hotels always price their reservations in USD and then use the daily offical rate (with some extra margin for them of course) to convert the price to ARS.

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