In the wake of the US elections, we’ve seen a lot of volatility in the value of the Argentine peso. After a number of ups and downs, yesterday the official dollar exchange rate reached as high as AR $15.80. And now, the exchange rate in Argentina really is upside down, with the blue dollar being sold at AR $15.62. Yes – you’ll now get a better bang for your buck exchanging cash with official vendors than the traditionally more economical unofficial street sellers.
Here’s the quick recap. Back in October 2011, the former administration introduced currency controls and as a result an unofficial market for exchanging US dollars and Argentine pesos developed – and the so-called blue dollar was born.
Back then, the official exchange rate quoted by banks was about 10 ARS/USD. The catch was, there were strict limits on who was allowed to buy dollars at that rate. An unofficial dollar peso exchange market was born, where the resulting blue rate that was usually around 15 ARS/USD was much higher than the official rate.
Beginning in December of last year, Macri began to put an end to the various currency exchange restrictions. The result? Although today that unofficial market still exists, the rates are much closer and the limits on who can buy and sell currency official in the bank are much smaller. If a person or a business is operating legally and has declared their money, theoretically they should be able to operate in the official market.
Even since the change, the blue dollar has typically hovered slightly above official currency exchange rate. But today at AR $15.62, the blue rate is a bit lower than the official bank rate that clocks in at AR $15.80 – making it more expensive if you are looking to purchase dollars. So why the shift? In essence, acquiring Argentine pesos on the blue or unofficial market is relatively more expensive than doing so through the formal market at a bank. This rate effectively translates to a scenario where people have to pay a premium to change dollars into pesos unofficially – and without declaring the transaction to a bank and thus to the government.
Despite the official dollar now available at better rates, the blue dollar exchange still very much exists, though it is undeniably in decline. At the end of last year when Macri removed the currency exchange restrictions, Héctor López Moreno, president of the “Association of Friends of Calle Florida”, estimated that there were around 250 of the unofficial traders known as arbolitos – literally “little trees”. Today, according to his estimates, there are only around 100.
The blue dollar is fading and at least today you’ll get a better exchange at official (legal) exchange houses. In short – if you are looking to exchange dollars for pesos today, you’re better off going to the bank.