Poof – Argentina’s Black Market is Gone

argentine peso

Before this week, if you traveled to Argentina on vacation, you needed to come with a briefcase full of U.S. dollars to truly get the best bang for your buck. That all ended yesterday as the new government lifted currency controls and allowed the Argentine peso to float freely. As expected, the official rate quickly moved to near-parity with the so-called “blue rate” and became normalized.

It’s a sure sign that a country’s finances are royally screwed up when you can get a significantly better exchange rate from a shady guy with a stack of bills standing on a street corner than you can from an ATM. I can only recall a few places where I’ve traveled in my life that this has been the case and it’s always been because of super-high inflation or an inept government following policies that were a ticking time bomb.

It was a little of both in Argentina, but now the bomb has been diffused. There will be some short-term pain for sure for the locals since prices will surely rise faster than wages for a while for local goods. Imported ones were already restricted and expensive though, so only the truly elite have been drinking Champagne or Scotch. Some of the luxury hotels were resorting to having their French soaps brought in via employees’ luggage since that was months faster than going through official import channels. Many major brands pulled out of the country entirely after finding it too difficult to restock their shelves. Here’s how the country’s new finance minister put it after making quick reforms just a week into his term, on CNN:

Those who want to export will be able to export without asking for permission. Those who want to import can import without permission. This is how a normal economy functions in any part of the world.

Now that Argentine companies can trade dollars freely (individuals still have a cap), Uruguay and Panama will probably see a drop in business. Company owners would frequently take a trip to the former by ferry or the latter by plane to do their real banking since they were so hobbled in terms of international finance in their own country. Each time they left though, they had to pay a 30% tax on their credit card, so I’m sure they’ll be glad to travel less for business in the future.

Argentina travel

What’s in it for Us?

The big benefit for travelers heading to Argentina is you don’t have to feel like a mob target by entering the country with wads of $100 bills. Now when you use your ATM or Xoom to get cash, you’ll get a rate that’s based in reality rather than one based on artificial levels. It should enable you to spend more of your time enjoying the country instead of chasing down a place to exchange your dollars or euros at the best rate.

Hotels were already priced in dollars most of the time, so there won’t be many changes there. After a while there will likely be a rise in the price of domestic goods as things normalize. Who knows what will happen for real, but the government may need to raise peso prices on subway tolls and museum admissions.

The one big thorn in every Amercan visitor’s side has not gone away yet: the exorbitant visa fee to enter the country. Basically they charge other countries’ citizens what we charge their citizens, so since it’s expensive for an Argentine (but not a Chilean) to come to the USA, we have to cough up $160 or so per person to them before we even get out of the airport. As expected, this has dampened visitor numbers—especially families—from their potentially most lucrative market. Since the new administration seems to favor logic over nationalism, odds are good this situation will also get resolved in the near future.

  1. Chris

    I had no idea you even had to do this when you visit Argentina, but it’s good to know I won’t have to do it myself now if I ever decide to take a trip there :)

    That visa fee is pretty crazy, though.

    • Anthony Thomas (@djfourmoney)

      It cost the same to visit Brazil. Why not get on the State Dept about charging citizens of those countries to come into the US? If the US drop it’s it, other countries will.

      • Julia

        The difference is, very few Americans go to Argentina or Brazil, so it’s hurting those two economies. If no Argentines or Brazilians came to the USA, nobody would notice except in Miami. It’s only recently that the U.S. even had a tourism department–it’s just not a big part of the economy compared to, say, the security industry.

        Americans will just go elsewhere—and do. Plenty of other countries are glad to have us and know we aren’t planning on staying there to work.

        • Rich

          I compltely agree with this statement. Part of the reason I am electing to go to Argentina now is because the $160 fee was dropped on the 16th.

      • Tim Leffel

        Hardly anyone goes to Brazil either unless they host a major sporting event. Again, they’re hurting themselves to spite the yanks. Pride over potential profits. Brazil is cutting the visa fee for three months around the Olympics, however.

      • Nick Summy

        Despite what others have said, the real reason the US requires visas for these countries is because many of the citizens visit the US and never leave. They need to invterview the Brazilians and Argentinians to make sure they have money, a job in their own country, and ties to the country so that they actually will return and not just stay in the US indefinitely. The visa requirement is mostly based on the percentage of a country’s citizens that stay illegally.

        The author is wrong though. Brazil has a similar system and they require US citizens to have an actual visa along with paying a fee. At least Argentina makes it easier and just charges the fee, no visa required. I wouldn’t be surprised if the US stops requiring visas for Argentinians in the near future. Its my understanding that they didn’t have a problem with people from Argentina overstaying but once their economy was in the gutter that was the fear.

  2. travel holidays

    Argentina is a great place for travel experience. I enjoyed your post. Thanks for sharing your experience with us.

  3. Mark

    Wow I knew it was a little tricky traveling in Argentina but I didn’t realise it was that bad. Hopefully tourists will be less of a target now if they’re walking around with less cash, and it can only be good for the local economy in the long run.

  4. E.

    Now that the bad guys are gone and the good guys are in power it’s going to be a lot better.

    No, it’s not that simple. Not in Argentina. The parallel exchange rate was crazy and unusual, but you can’t just simply blame the previous government. It happened because of many many factors. Argentina has always had a very unhealthy obsession with the dollar. Justified in many cases, because of inflation, hyper inflation in the 80s, devaluation, etc.
    So it’s hard for a country to hold on to its reserves when people don’t trust the local currency.
    The previous country did many things the wrong way, but many believe they were right in being protectionist. The US and EU are protectionist too, but they don’t like it when others are. They never did, it’s not convenient for them. This is no secret, but people seem to forget about that easily.
    If you are not first world you are supposed to “let the market” decide everything. Export commodities like a good boy, import manufactured goods in exchange, and please, never ever improve your industry. That’s how we stay friends.
    This new government looks very pretty, but shares that way of thinking, which has been proven not to work in the past.
    Hopefully, the country has learned its lessons and history won’t repeat itself.

    Oh, and the fee you pay to enter is a reciprocity fee, as mentioned. Actually, if Argentina mirrored exactly was the US does, then Americans would have to apply for a visa, pay that amount, then go to an interview at the embassy… and sometimes get rejected.

    Anyway. I’m not trying to start a fight, nor am I anti American or anything. I’m just trying to level things up. No animosity here!

    • Tim Leffel

      “The US and EU are protectionist too, but they don’t like it when others are.” Sort of true, but you can buy imported goods in the USA cheaper than you usually can in the country itself because of liberal trade laws. Toys and solar panels from China, laptops from Taiwan, wine from Chile, cigars from Honduras, rum from Barbados, shrimp from Thailand, perfume from France…

      The protectionist moves usually fall under “flooding the market” and apply to agriculture or a specific manufactured item. Not across the board. There are some blatantly unfair ones like sugar, but not many.

      True about the visa and if I could change U.S. law I would, but reality is the policy hurts Argentina more than anyone. American travelers just go to Peru, Chile, or Ecuador instead.

  5. Dre | Studio Lighting Kits

    Nice! If they’re no longer existing in the downtown areas of Argentina, I believe that there are alternatives already setup in similar situated cities in South America or South-East Asia. :) Gotta Love the Black Market. ^_^

  6. Cheryl

    It’s very hard for me to tell if travel to Buenos Aires is smart or not…I’m in the middle of planning a trip there but it sounds like prices there are going up by the minute. It’s also hard to find anything on line about it….any advice?

    • Tim Leffel

      Anything imported has gone up because of the official currency rate drop. Domestic prices have gone up some, but it’s kind of a wash since you now get more Argentine pesos for your dollars or euros. Unless you’re coming from a developing economy country though, it’s going to seem like a great bargain. Just go!

  7. E.

    I’d just like to provide a brief update for anyone still reading this. Prices have gone up a bit, some things more than others. It is still pretty affordable for first world travelers.
    The black market has not disappeared, it always exists because some people still move their money outside the “system”. You will still get a better rate, only now it is just slightly better, 5% maybe.
    The big problem I find for travelers right now it that ATMs are spitting very little money. You can only take out 2000 pesos or 2500 at citi bank per transaction. That’s less than 200 dollars. But if you are fine with that and not worried about withdrawal fees, then I guess it’s not a big problem. You can also pay things by card and it’ll be fine.

    Withdrawal limit will change at some point this year when they introduce new bills. 200 and 500 peso notes.

  8. Sam

    I can’t find a date on this article which is important to know how relevant and timely the info is. Can you please date your articles/entries?

  9. Carla

    Visa Waiver is at least 30U$S for european citizens visiting USA. Argentina citizens must pay 160U$S to apply for the visa (there is a high rate of rejected for no particular reason). I don’t see why Argentina shouldn’t charge US citizens. Wonder if the schengen is charging anything to US citizens. If you have family members here maybe you can get an argentina’s citizenship by filiation. Also if you are too stingy to pay the 160$ then you wont be spending much money in the country. Seriously a ticket from USA is around 1000U$S but you dont want to pay the visa?

    • Tim Leffel

      You’re kind of supporting my point. Airfare is more to start with, then the visa fee of $160 per person. So like Brazil, Argentina loses out on the U.S. market to other countries that don’t charge it (yes, including Europe). I’m not saying the U.S. system is fair, but it doesn’t really hurt the U.S. if Argentines don’t visit. Florida by itself gets more annual visitors than Chile, Argentina, and Brazil added together. Going the other direction though, an increase in U.S.visitors would make a huge difference—as it has in Peru and Ecuador. After abolishing its similar fee, Chile had a record year.

  10. sam

    Can someone do a cost of living comparison between Bueno Aires and Montevideo in Uruguay with the new Peso situation? I plan to take tango lessons there and wondering which country is indeed a much better value proposition. Thank you in advance.

    • Tim Leffel

      Try Numbeo.com for crowdsourced info on cost of living. You can compare them side by side.

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