Argentina has one of the most unusual economies in the world. It is important for savvy visitors to learn about the parallel currency market and the so-called ‘blue dollar’ in order to negotiate banking here and save money.
What Happened to Argentina’s Economy? A Brief History
The economist Simon Kuznets once said that there are “four sorts of countries: developed, underdeveloped, Japan, and Argentina.”
Thanks to its wealth of natural resources and fertile land, Argentina enjoyed an abundant beginning to the 19th century and was one of the world’s richest countries only one hundred years ago.
The riches of yore are evident throughout Buenos Aires, with it’s parks, gardens and plazas, elegant public statues such as the the Nerieds Fountain, and spectacular buildings such as the Colón Theater, and the old Grand Splendid.
The wealth is even evident in one of the city’s biggest tourist attractions, Recoleta Cemetery, where departed Argentines forever rest in the luxury of large, pricey mausoleums.
Outside of Buenos Aires, the country’s early wealth can be seen in the intricate 17th century Jesuit ruins in Misiones near Iguazu Falls, and the luxury Bavarian-style resorts of Bariloche.
It wasn’t for nothing that the French coined the phrase, ‘rich as an Argentine‘ after seeing their lavish spending habits in Europe during the the Belle Époque!
The Argentine Paradox: Economic Decline in the 20th Century
Argentina’s pendulous political landscape and corruption are commonly considered the main cause of the country’s decline since the golden days (or in Argentina’s case, the silver days — its name is derived from the Latin argentum, meaning silver).
Since Argentina gained independence from Spain, it has defaulted nine times and come close many other times.
A 1930 military coup d’état was the first of six in Argentina in the 20th century. Due to its agricultural-based economy and a relatively small population, Argentina was not as affected as other countries by the Great Depression, but the era ushered in a focus on increased industrialization and isolationist economic policies.
The Influence of Perón
The policies of the caudillo Juan Domingo Perón (the founder of Peronism) have had the largest influence on Argentina’s economy since he was first elected in 1946.
A pro-labor nationalist who admired Benito Mussolini, he, along with his beloved wife, Evita, sought to prop up the working class. Initially social aid programs and pro-union policies worked to improve the lives of workers and grow the middle class, but things began to decline again by 1950 due to fewer exports, sky high inflation and stifling state intervention in the business sector.
The unraveling of Argentina’s previous economic success didn’t happen overnight. Even as late as 1965, Argentina had a GDP that was considerably higher than Japan, Spain and Ireland.
The first of many devaluations of the currency in the modern era took place in 1970. Previous to that there hadn’t been a devaluation in nearly 90 years.
By the mid seventies Argentina’s manufacturing sector was in decline and the state had to prop up many industries that had been nationalized.
The military take over of 1976 and subsequent Dirty War were catastrophic for the country. Industrial production further declined, salaries were frozen, external debt increased and better off Argentines fled the country to escape the repressive government.
A Trend of Capital Flight
Distrust of the government and the integrity of its economy ushered in a trend of capital flight with even high profile politicians putting their money in Swiss bank accounts, and later tax havens, and even cryptocurrency in recent years.
The country almost defaulted again in 1982. That year a new currency was introduced called the Peso Argentino, with one peso Argentino equaling 10,000 units of the previous currency. This didn’t stop chronic inflation and devaluations though, and yet another currency, the Austral replaced the peso Argentino at a rate of 1000 pesos to one Austral in 1985.
The current Argentine peso has been around since 1992 but the international exchange rate was initially pegged to the U.S. dollar, one to one. The scheme, known as the Convertibility Plan, was meant to increase confidence in the actual value of the national currency.
Free-for-all privatization took place in the 90s under President Carlos Menem, who claimed to be a Peronist, despite his neoliberal free market policies.
Initially his plan worked and after 15 years of stagnation, Argentina was again considered an upwardly mobile country. The international Monetary Fund and private investors opened their pocketbooks to Argentina. With the changes, international trade increased and middle class Argentines once again had cash to vacation in Europe. The initial benefits to privatization of state companies — such as the notoriously bad utilities improving, people waited years just to get a phone line — increased investor confidence in the country.
The plan was unsustainable though: animosity between the classes returned as professionals fared better, while the wages of the working class were stagnant. The privatization of industries — once bloated by state workers — caused mass firings, increasing unemployment.
Argentine Great Depression & 2001 Crisis
The Argentine Great Depression began in 1998 and lasted until 2002.
The December 2001 crisis is remembered as one of the most shocking periods in recent Argentine history. The country couldn’t pay its debts, the IMF had stopped the flow of money to the country, so the government froze citizen’s bank savings. Retirement savings were seized and the government used that and bank reserves to try and make payments on national debt.
People’s money had not only been devalued 70% but they could not access their money in the banks. The people gathered outside of banks, banging pots and pans in a form of protest known as a cacerolazo.
In some neighborhoods people bartered for goods and made homemade coupons to use as a medium of exchange.
Peaceful protests turned into riots all over the country. The most notable incident was, ‘El Argentinazo ‘ which resulted in 39 civilian deaths across the country, including nine minors. Images of riots and police repression in the Plaza de Mayo were broadcast all over the country. The president declared a state of emergency on TV, but the uprisings only continued. The president’s entire cabinet resigned.
An image seared in the minds of older Argentines is that of December 20, 2001 when President Fernando de la Rúa announced his resignation by escaping from his offices at the Casa Rosada by helicopter. Protestors watching in the Plaza de Mayo cheered and there was celebration all over the country, but the chaos continued as the country went through five presidents during the next two weeks.
Despite the extreme last-minute austerity measures, the country defaulted on it’s debt of over US$ 100 billion in the years after the 2001 crisis, Argentina was suddenly a bargain for those with foreign currency. One positive effect was that tourism to Argentina gradually increase to the highest numbers ever over the next decade, as those with foreign currency could get more mileage for their moolah.
By 2005 foreign injections of cash helped stabilize things for citizens, with employment increasing and poverty rates falling.
Foreign Currency Restrictions
Under the government of Cristina Kirchner (2007-2015) strict restrictions placed on purchasing foreign currency created a huge black market for dollars, meaning foreigners could sell their dollars and euros on the black market for sometimes almost twice the value. This mean that during the years of 2007-2012 Argentina was particularly popular with travelers after word got out about the five dollar steak and Malbec dinners.
Argentine’s understandable distrust of banks remain so high that only 50% of working citizens even had a bank account. Argentines prefer to save in dollars, since the inflationary peso loses value so fast.
One of Mauricio Macri’s first moves after winning the presidency in late 2015 was to regularize the flow of currency so that the black market for currency was largely diminished. He also lifted subsidies for utilities and raised public transport fares, which meant travel in Argentina wasn’t the same bargain destination for travelers that it was before.
¡Blue Dollar Back Again!
Things get confusing for those with old guidebooks because, while the currency situation was normalized for several years, the currency controls prompted by rampant capital flight and dwindling foreign exchange reserves were reinstated starting in September, 2019.
When the previous government took power in December 2019 (now with Cristina Kirchner now serving as Vice President) and the country reinstated its ‘creative’ currency controls that create the large black market for dollars and Euros.
Today, stagnant wages, rampant inflation, high unemployment and the current global health crisis mean poverty is on the rise again.
Paradoxically, this means Argentina is once again an extremely affordable destination for travelers, digital nomads and so-called ‘expats.’
In Buenos Aires and around the country, the official bank exchange rate is once again significantly lower than the black market rate. Travelers will find they can get a more pesos per dollar by exchanging cash on the black market, or by using an electronic money transfer service, the nitty gritty of which is explained in this post.
Today, the black market (or so-called ‘blue dollar’) for foreign currency is once again so strong that by avoiding ATMS or using credit cards, travelers will double their money.
To give readers an idea of how fast the real value of pesos is falling on the international markets, in January 2020 the Blue Dollar spread was hovering around 25%. One year later, in January 2021, it had jumped to 50%.
At the time of writing, one US dollar is worth about $93 officially and worth about $151 on the parallel currency market.
So with renewed currency controls, the situation is that travelers can save lots of money if they come to Argentina with US dollars in cash. Travelers are legally permitted to enter Argentina with US$-10,000 without declaring it.
Outside of Buenos Aires, travelers may find they can even get more pesos in exchange for their dollars.
Carrying USD or Euros is also a good way to avoid — not just a bad exchange rate — but also steep ATM fees, which run about US$10 per withdrawal in Argentina minimum.
For those who didn’t do their homework and come with cash, another way to access money, avoid bank fees and get a better rate than at the bank is to utilize a money exchange service such as Western Union or Remitely.
Services such as Transferwise and Xoom give rates much closer to the official rate but are sometimes used by digital nomads to move money around from Argentina.
In Argentina, both the official and bank market rates fluctuate a lot, so check the currency converter below to see the official rate before planning your trip.
To see the black market rate, check a daily newspaper in Argentina — most have all the different exchange rates listed on the front page.
The Blue or Black market dollar is listed as the ‘dólar informal‘ while the ‘dólar oficial‘ is the bank rate.
To confuse things further, there are a bunch of other exchange rates listed, but cash is king in Argentina, so visitors will want to concentrate on the ‘dolar informal‘ or blue dollar rate.
→ To read about exchanging money on Buenos Aires black market, read Black Market Money Exchange & Other Hustles on Florida Street
→ To read about transferring money from your home bank account if you don’t have cash, read Money Transfers to Argentina
The calculator below shows the official rate in Argentina. Remember to compare it to the ‘Blue Dollar’ rate and other categories of conversion. To do so check any Argentine news site or economic newspaper such as, Ambito.