Understanding Argentina’s Exchange Rate Game: A Guide for Travellers
If you’re planning a trip to Argentina, prepare to dive into a topic that’s often confusing but impossible to avoid: foreign currency exchange, a.k.a the blue dollar phenomenon. As an Argentinean living overseas that visits my homeland quite often, I can assure you this system is complicated even for locals, so I completely understand how overwhelming it might feel to travellers. But don’t worry—I’m here to simplify the peso-dollar puzzle for you!
Argentina’s economy has been stuck on a relentless inflation rollercoaster. For years, the government has been printing pesos to fill budget gaps, causing a rampant inflation. Prices for goods and services kept climbing, and locals have watched the value of their savings vanish into thin air.
To protect their savings, many Argentines turned to US dollars as a safe haven. But here’s the snag: everyone wanted to exchange pesos for dollars, yet there weren’t enough dollar holders willing to swap to pesos. In other words, the demand for dollars far exceeded the supply. This imbalance between supply and demand drove up the dollar-peso exchange rate. The relentless demand for dollars meant it took increasingly more pesos to buy the same amount of dollars, further devaluing the local currency.
Unhappy with this, the government introduced strict limits on the acquisition of dollars for locals. This move gave rise to an informal foreign exchange market, creating two key exchange rates:
- The Official Rate – Offered by banks and official institutions, but heavily restricted.
- The Blue Dollar Rate (Dólar Blue) – Found on the black market, where Argentines could buy as many dollars as they wanted, albeit at a rate often double the official one.
Enter the Blue Dollar (a.k.a. "Dólar Blue")
Since 2019, due to the above government restrictions, it’s been nearly impossible for Argentines to simply walk into a bank and buy all the dollars they want. As a result of this, a new phenomenon emerged: the blue dollar. In Argentina, the blue dollar is a dollar like any other, but sold without restrictions on the informal market for almost double the official price. Argentines had little choice but to buy this currency at a higher price to safeguard their savings from disappearing due to inflation.
To facilitate these transactions, informal institutions called cuevas (Spanish for “caves”) emerged. These are places where pesos and foreign currencies are exchanged at the blue rate.
For travellers, this presented an incredible opportunity. Exchanging money on the informal market meant getting far more pesos for your foreign currency than at an official bank. Suddenly, your dollars or euros had double the spending power!
However, this also meant travellers had to carry significant amounts of cash since paying with a credit or debit card converted foreign currency into pesos at the much lower official rate.
The New Card-Friendly MEP Dollar Solution
Thankfully, as of 2024, the Argentine government introduced a more convenient system for travellers to discourage carrying large amounts of cash. Now, when you use your credit or debit card, you automatically get a favorable exchange rate called “dólar MEP”, and not the lower official rate anymore. This rate is almost identical to the blue dollar, so you no longer have to worry about hunting down informal brokers or carrying wads of cash, like before.
Every swipe or tap of your card gets you this better rate without any extra effort. However, you may still wonder:
“What if I need cash?”
When Plastic Won’t Cut It: Getting Physical Pesos
While card payments are becoming more widely accepted, you’ll likely encounter situations where cash is still king—especially in smaller towns or for certain services. Here are my top tips for managing cash:
1. Avoid ATMs if You Can
Argentine ATMs have painfully low withdrawal limits and absurdly high fees. They’re a last resort.
2. Use Western Union for the Best Exchange Rate
What I personally do—and it’s still effective as of November 2024—is transfer money from my foreign bank account to myself using Western Union. This allows for cash pick-up in pesos in one of their many local branches without needing a bank account in pesos. Western Union offers a competitive exchange rate, and while a fee applies, it’s far more convenient than using an ATM. Additionally, withdrawal limits are conveniently very high.
Pro Tip: Stock up on pesos in Buenos Aires city, where Western Union locations are plentiful. Outside the capital, branches often have lower cash limits, long queues, or may not even exist despite being listed online.
3. Bringing Physical Dollars
Carrying some US dollars is still a smart move, especially for emergencies or when card payments aren’t available. Here’s how to make the most of your cash:
- USD Is King: US dollars are more widely accepted than other currencies, such as euros, outside Buenos Aires, and they often fetch a better exchange rate.
- Cuevas (Informal Brokers): Ask your hotel for a recommendation for a reputable cueva. These are generally safe for tourists and take your dollars at the “blue rate”.
- Calle Florida: This bustling Buenos Aires street is home to numerous arbolitos (‘little trees’ in Spanish), who are informal money changers. The nickname “arbolito” supposedly comes from the green of their dollar bills. You will recognize them as they shout “cambio, cambio” (change). Compare rates before exchanging money and exercise caution when doing so.
- Shops and Restaurants: Some establishments accept dollars directly at a rate close to the blue rate. Look for signs outside indicating they take USD and check the rate they offer before paying.
- Avoid Banks: While official banks will gladly exchange your dollars, they do so at the official rate, which is significantly lower than the blue or MEP rates.
Quick Tips for Navigating the Exchange Maze
1. Pay with Plastic: Use your credit or debit card for the best exchange rate (dólar MEP). Just remember that some smaller businesses might not accept cards or may add a fee.
2. Use Western Union for Cash: Transfer money to yourself and pick it up in Buenos Aires to avoid headaches.
3. Bring Dollars as a Backup: Having some US dollars on hand can be a lifesaver for emergencies or situations where cards aren’t accepted. Exchange them at a reputable cueva or on Calle Florida.
Argentina’s exchange rate system might feel like a wild game of financial tag, but with this guide, you’ll be ready to tackle it like a pro. So pack your bags, bring a bit of patience, and get ready for an unforgettable adventure in this stunning country—where even managing your money becomes part of the story!
Update December 2024
As of December 2024, the gap between the two exchange rates has narrowed, with the official rate around 1050 pesos and the blue dollar at approximately 1070 pesos.
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