How to Use (and Possibly Understand) Argentina's Black Market Money Exchange

“Ummmm, say what?”

Hang in there a bit, don’t freak out. When you first arrive, you can find an ATM and take pesos out at the official rate. In most countries, you wouldn’t think twice about the exchange rate that you’d be receiving in this situation, and maybe you even have a “travelers” debit or credit card that doesn’t charge fees on foreign transactions. However, if you just wait until arriving in downtown Buenos Aires to exchange your money, you could receive 70-90% more pesos in return.

“Example, por favor.”

As of October 2014, the official exchange rate is 8.45ARS : 1USD. So, for example, if a bottle of Malbec wine costs 32 pesos, using the official exchange rate — take out 32 pesos at an ATM, use dollars at the wine store (on occasion stores accept dollars), or use a credit card — that equates to US $3.79. Meanwhile, the dólar blue rate fetches 14.60ARS : 1USD. So, by using the dólar blue rate, this same bottle of Malbec costs you $2.19, or 42% less. By the end of your trip, this 73% difference could go a long way.

“Okay, this sounds shady.”

While it is technically illegal and “unofficial,” this not-so-clandestine currency market is a necessary evil in the Argentine economy and thousands of people every day do it.

The black market exists primarily because of a couple factors: most Argentines are prohibited from purchasing dollars at the official rate and the Argentine peso is notoriously unstable (see the frightnening historical data). Knowing the value of the peso could plummet overnight, completely wiping out their savings, Argentines don’t want to be stuck holding too many pesos. So they are compelled to seek out US dollars — one of the world’s most stable currencies — illegally on the black market for their savings.

So don’t worry, it is safe and nothing will happen to you. The local newspapers Ambito and Cronista even publish the dólar blue rate every day. That said, Argentina’s president, Cristina Fernandez de Kirchner, has pledged to crack down on the dólar blue and her government’s early efforts — aimed at traders and brokerage houses, not buyers — have weakened the black-market currency.

“Fine, I’m in. Where do I find these elusive traders?”

Black market currency dealers operate out of cuevas (“caves”) — physical exchange centers often labeled as a jewelry or gold exchange shop — or arbolitos (“branches”) — individuals on the street who will take you inside a nearby, nondescript store to make the exchange. If you are traveling in Buenos Aires, it’s impossible to walk down Florida Street, located in the main commercial area of Recoleta, without hearing the familiar ring of “Cambio! Cambio!” from currency traders.

You can find similar neighborhoods in other Argentine cities as well, if you ask around. Just don’t expect to receive as favorable of a blue rate as you will in Buenos Aires.

The safest bet is to ask an Argentine acquaintance to trade with you. As I said, everyone (everyone!) wants dollars here. It is the primary means of saving for Argentine citizens. So bring as many physical US dollars as possible with you on the plane. You’ll be glad you did.

Inflation

With an estimated the annual rate of inflation as high as 40% in 2014, you may notice shortages. Because producers or stores cannot possibly raise their end prices to be in line with the rising costs associated with production, the economically rational option is to simply not produce — resulting in shortages. Shortages may also appear when there is an anticipation of a looming devaluation or spike in inflation. If people expect the purchasing power of their money to decline, they will stock up particularly on basic goods in order to safeguard against this risk.

“Great. Whatever. Just tell me what this means for me as a traveler.”

Two morals of the story: One, if a certain item is super important to you, make sure you buy it when you see it on the shelves, especially if you are traveling through small towns that don’t restock often. Two, if you are traveling in Argentina for, say, more than a couple of months, stock up on essentials at the beginning of the trip because prices are unlikely to go down. The bus ticket that costs 800 pesos today might easily jump to 1,200 pesos two months from now. Stranger things have happened.

Imports

Or, let’s be honest here — lack of imports. Because importing goods here requires exchanging pesos for dollars at the Central Bank, where the current supply of dollars is at an eight-year low, imports are relatively restricted. This applies especially to durable, expensive goods.

Case in point, earlier this year McDonald’s had a ketchup shortage. Could you imagine eating fries from McDonald’s without ketchup? But I digress..let’s get back to what travelers really need to know.

Tourist arbitrage: Make cash so you can vacation like a motherf*#!n* baller.

Basically, let’s just say that there’s been more than a few travelers who have funded their trip by selling off some extremely in-demand, hard-to-get items to locals. MercadoLibre, a South American e-commerce website kind of like Craigslist (which Argentina also has), currently lists the iPhone 5s at around 12,000ARS, or $822. The new iPhone 6 costs between 22,000-28,000ARS, or about $1,500. Just make sure that the phone you are selling is unlocked. Arbitrage opportunities such as this exist for most electronics products, but Apple products in particular fetch a premium in Argentina.

A growing number of other peer-to-peer e-commerce sites such as Entrusters, an online service that connects travelers with local residents, also allow for those traveling to Argentina to take advantage of Argentina’s import restrictions. For example, if an Argentine requests a Nikon camera, and you post on the website that you will be traveling to Argentina, Entrusters will match you up with the buyer. All you have to do is bring the item to Argentina, give it to the buyer upon arrival at a pre-determined location, and Entrusters acts as the financial exchange platform.

The bottom line

While things may not be going too hot in the macro sense, Argentine culture is no stranger to economic insecurity. In fact, there is an expectation by many for omnipresent economic instability. As a result, Argentines truly live in the moment and take adversity in stride.

Join the stride while keeping in mind these basic bits of information, and you will surely enjoy the buena onda (“good vibe”) that Argentina has to offer — with a pocket full of pesos.