the dollar, a national passion

the dollar a national passion

Having lost all confidence in their currency, the peso, Argentines resort to the American currency to save and protect their assets. And this, whatever the price.

From our correspondent in Buenos Aires,

Cambio, dollar, casa de cambio… » (« Exchange, dollar, exchange house… “), ” More currency, dollar, divisas… » (« Best exchange, dollar, currencies…”): From 8 a.m. until late at night, on Florida and on Lavalle, the two main pedestrian streets in the center of Buenos Aires, the Argentine capital, the arbolitos (“little trees” in Spanish, editor’s note), so named because they are supposed to be immobile and hold greenbacks, offer their services. They are informal, illegal currency traders, but acting in full view of everyone, including the local policeman.

Sometimes wary, but nonetheless informed, foreign tourists turn to arbolitos to sell their currencies – mainly dollars or euros – for Argentinian pesos which they will use for their expenses on the spot. They will buy them at double the official rate – 205 pesos for a dollar or a euro at the beginning of March -, a godsend for them, and thus enjoy the good life in Argentina.

In search of dollars to then resell them

But the arbolitos are also, and above all, solicited by Argentines who buy dollars permanently, as soon as they can, and in particular when they receive their salary – in pesos -, as we see at the beginning of March in Lavalle. Why do they do it, when, in this sense, the exchange rate disadvantages them, since they will have to spend more than 415 pesos for a dollar? First, because at the official rate, it is impossible to buy dollars. At best, those who are up to date with their taxes will be entitled to 200 dollars per month, at an intermediate rate between the official rate and that of the parallel dollar market known as the “blue”.

Then and above all because, having lost all confidence in their currency, they are constantly looking for greenbacks, which they buy at all costs and whatever the rate, moreover assured of winning at the exchange if they want to resell them afterwards. . Indeed, in Argentina, the peso is devaluing from month to month, if not from week to week, against the dollar. A devaluation fueled by inflation, but also by this appetite of Argentines for the greenback. Even when the dollar drops around the world against other currencies, it appreciates in Argentina against the peso.

The dollar, preferred for real estate transactions

For decades, while inflation has eroded purchasing power – prices rose 95% last year – the dollar has become the safe haven for Argentines. We therefore save in dollars, but not only: the greenback is the reference for any transaction of a certain importance, so that, for example, apartments are sold and bought in dollars. And in physical dollars, which everyone keeps at home, under the mattress as they say, or in a bank vault.

For a real estate transaction of one million dollars, the buyer will thus present himself with 10,000 bills of one hundred, the bundles of which will be carefully and nervously counted by the buyer in front of the eyes of the notaries who will validate the operation. Astonishment guaranteed for foreigners who attend such an operation for the first time.

Transactions that take place in the back office of exchange houses

As for the arbolitos, these illegal traders are Venezuelan, Peruvian, Paraguayan or Argentinian, each group giving voice with its accent in more or less good intelligence on a portion of the pedestrian streets. They work on commission for well-established exchange houses, but which can only exchange currencies in their offices at the official rate, or for others, undeclared, which only operate on the “blue” market. “, illegal. There, the exchange rate reflects the true relationship between the peso and the dollar, if we take into account transactions in Argentine stocks or bonds in New York, and therefore the true value of the peso. Once contact has been established with the customer in the street, the latter will be taken to the back office of an exchange house or a tourist agency, from where he will leave with his pesos or dollars according to the case.

Suny M., building caretaker, has her designated forex trader on Lavalle: “ Every month, when my salary is deposited in my bank account, I call him to find out the daily rate. I keep the pesos that I will need for immediate payments and the purchases for the week that I will not make by credit card and I buy dollars with the rest. I will then resell them, as and when, to meet my expenses, at a better rate, except surprise. If I have a balance left, which is the case in particular during the payment of the thirteenth month, it feeds my kitty in dollars, which will allow me to pay for a trip abroad for me or for my daughter. »

Millions of Argentines do like Suny. It is estimated that the 46 million inhabitants of this country hold 51 billion dollars in notes, at home or in safes, or 1,100 dollars per person. With the exception of the United States, in no other country in the world are there so many dollars per capita – only 6 dollars in neighboring Brazil, where no one is suspicious of the national currency, the real -.

As the inflation announced in Argentina for 2023 is 105%, the passion for the greenback, whatever the rate of the “blueis certainly not about to fall.

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