Now that Finance Minister Alfonso Prat-Gay has announced the end of restrictions on purchasing foreign currency in Argentina (a set of controls known locally as cepo or “clamp”), it’s a new dawn, it’s a new day, it’s a new dollar for me.
And, you know, the rest of the country.
But how does this affect us on an everyday basis? Here is the lowdown on what you can and can’t do now.
Yes. You may have to wait in line for some time, but there’s no daily limit to the amount of dollars you can buy (just not more than your purchasing power, that’s never really a good idea.) The only limit is US$2 million per month, which I discuss more below.
What if I spent dollars with my credit card yesterday? What exchange rate will I have to pay when the bill comes?
According to Prat-Gay, you’ll have to pay the rate that applied on the date your bill is issued. So if your payment is due in a month’s time, you’d pay whatever the dollar is worth in a month. This applies only to credit cards: if you paid something in dollars yesterday, you’d have paid yesterday’s exchange rate.
Note: if you paid something in pesos and in installments, the value won’t change.
Do I still need a permit by AFIP?
No persecution doesn’t mean no monitors, though: if you start buying dollars that are way out of your purchasing power, the AFIP will still ask you questions. Plus, you still have to pay your taxes.
What will I need when I go to the bank to buy dollars?
Yes, you as an individual person will be able to buy up to US$2 million a month. There will be no restrictions on said purchase and Prat-Gay emphasized that nobody will have to go through the AFIP.
The limits depend on who is buying dollars, though: if you’re a company that imports stuff from abroad, you have no limits. Check out our own Bianca Fernet’s lowdown on what lifting the cepo means for everyone.
In all seriousness, the value of the dollar will be defined according to the buying and selling in the market. That’s why Prat-Gay was careful not to promise anything, although members of his economics team estimated that it would be valued at around AR$14.50.
“There will be a policy of what economists call “dirty float” […] There will be fluctuations in the exchange rate but there will also be a Central Bank (BCRA) with the necessary tools to intervene if the dollar rises or decreases too much,” said Prat-Gay.
Let me save you the Google search: a dirty float is basically when an exchange rate “floats” or does its thing in relation to other foreign currencies but is sometimes subject to government intervention to manage fluctuations or ensure smooth sailing.
Will the dollar blue continue to exist?
Officially, no. From now on, according to Prat-Gay, there will be just one official exchange rate.
However, that is what Prat-Gay would say, isn’t it? Although the gap between the official value and the blue dollar value may close substantially, 35 percent of Argentina’s economy is informal (i.e. payments en negro, etc.), so it’s fairly safe to say that the blue dollar will continue to exist. It’s called a black market for a reason, right?
The dollar began its first day without the cepo at a buying price of AR$14 pesos, and AR$15 selling price and dropped by AR$0.50 in the first 10 minutes. The fact that the cepo is being lifted doesn’t mean it’s going to be a cake walk: as our own Biance Fernet said, things will be “wobbly” at first.
Welcome to the new roller coaster in the theme park of Argentine economics.