Thus far my research has delved into some of the issues with Argentina having bi-monetary society. Argentina is currently dealing with issues from using both US dollars and Mexican Pesos. US dollars are stronger than Pesos, so they often save money for consumers due to the rising dollar. Even though the individual consumer may benefit, it weakens Argentina’s economy overall. Due to this Peso’s have over a 50% gap with the dollar. 1 dollar is equal to 1,250 Pesos in Argentina. And it has caused monumental inflation rates to build in the Argentinian economy, inflation has ballooned to over 200% in the country. The interest rate benchmark has recently been raised to a whopping 133%. Due to all of these dual economic issues, Argentina is in the worst economic state they have been in for decades, and it seems there is a recession looming around the corner for citizens. Which unfortunately is not unknown to Argentine citizens, since they have been in a recession for “a third of the time since the 1950’s” (Varma). However citizens are continuing to use dollars due to the personal benefit. It was “estimated that Argentines held about $200 billion in banknotes — 10 percent of all the dollars in circulation in the world and a fifth of those outside the United States” (France 24). Having such a large percentage of worldwide US dollars is strange considering the economy officially uses Pesos.
Due to the duo-economy many black market money changers trade dollars for pesos, unbeknownst to tourists that the dollar actually carries a higher value. Tourists however continue to use this method because it has a deceivingly high output of pesos. “These days one dollar gets its bearer about 236 pesos at the unofficial or “blue rate,” instead of 130 at an official currency exchange” (France 24). Many unofficial money changers feel they are doing a service due to the high blue rate. The country has indeed become heavily reliant on this service since, “dollar rates in Argentina’s black market have skyrocketed almost 60,000%, according to Insider calculations based on figures from bluedollar.net, which provides data on the country’s informal exchange rates” (Varma). However they are also contributing to the problems introduced by the dual economy.
Argentina also was responsible for hoarding hundreds of millions of dollars in 2022. “Argentines had hoarded about $246 billion in undeclared cash, overseas bank accounts, and safe-deposit boxes at the end of 2022, the American libertarian think tank Cato Institute said in a blog post last month, citing figures from Argentina’s statistics agency. Local media also have reported similar figures” (Varma). That adds up to approximately 12 times the country’s official foreign currency reserves, and 40% of the total GDP. Unfortunately things aren’t looking good for the future in Argentina, recession is close and the issues with inflation and dual economic reserves are all combining to create a challenging economic situation in Argentina.
France 24. (2022, July 1). Argentina’s Black Market Dollar Trade: Illegal but part of life. https://www.france24.com/en/live-news/20220701-argentina-s-black-market-dollar-trade-illegal-but-part-of-life
Otaola, J. (2024, January 17). Argentine black market peso hits record low as gap to official … Reuters. https://www.reuters.com/markets/currencies/argentine-black-market-peso-hits-record-low-gap-official-rate-climbs-above-50-2024-01-17/
Varma, A. (2023, October 19). The “blue dollar” is booming: Argentina’s lust for the buck pushed its black-market rate up 60,000% since peso parity ended in 2002. Business Insider. https://markets.businessinsider.com/news/currencies/argentina-blue-dollar-surged-60000-percent-since-peso-free-float-2023-10
