CRY FOR ME ARGENTINA: INFLATION THEORY #101

If you want a great ski tune here track down our mate & local freeskee boss Lauti,aka Lautaro Spilj. He can be hard to catch up to though. © Owain Price

But first, an economics lesson. Argentina is back to being excellent value for foreigners bearing wads of USD bills to change on the black market - known locally as the ‘blue dollar’ rate.

Thanks mainly to government incompetence, inflation is running at over 100% annually. Yes, Argentina manages to achieve Australia’s yearly inflation on a monthly basis, 7.7%+ a month.

Sure, there are external factors like Putin’s war on Ukraine, and a drought, but neighbouring Brazil had virtually no inflation last year. Here’s the thing, simply printing money doesn’t actually work.

Meanwhile the multiple official dollar exchange rates lag far behind. So anyone who can in Argentina wants to offload their increasingly worthless pesos for USD cash at the first opportunity. Like holding the lid on a pressure cooker, the government tries to keep things under control, but inevitably pressure builds and it all goes boom again.

Bad for them, good for the cashed up visitor. Just while I was there for 10 days last July, the ‘blue’ rate blew out from 220 to 320 pesos to the dollar, while the official rate only moved from 125 to 127. A handy little 45%+ change that made lift passes about US$25 / A$38 a day, right in the middle of peak high season.

The resort village was packed with tourists from all over South America, also taking advantage. There were even lots of Bolivians, who I had never encountered there in the preceding 20 seasons.

Apart from great steak and red wine at bargain rates, some ski gear that had been imported at official import rates was also super cheap at street rates. Yet paying with a credit card meant paying the official rate - or well over 100% more.

Late last year the government introduced a better rate for foreign credit card payments, the ‘Tarjeta Dolar’ (‘Card Dollar’), which appears as a credit transaction after the original one on your card statement. Good to know, and use if you have no alternative, but it is still cheaper using ‘blue’ USD cash rates. More so when there is a rapid blow out of those anytime you are there. So just take plenty of US$50 and $100 notes, as smaller bills don’t get the same rates. Forget Aussie or Kiwi cash, you won’t get anywhere near as good a rate for them. Just beware of scammers..

In tourist areas most shops and restaurants announce their dollar rate openly, which should be close to the going street rate and you can always offer to offload more when paying a bill. The rates are published daily in mainstream media, so they are no secret. It’s all almost enough to stop you complaining about our Reserve Bank’s next interest rate hike. Things could be worse!

So yes, cry for me Argentina indeed. Sadly but inevitably, with a presidential election happening late this year, things will just blow out more as the government prints even more money in an attempt to hang on to power.

When I first went to Argentina backpacking in 1978, you needed wads of pesos to buy anything. Forty five years & a couple of new currency resets later, it’s deja vu. Enough inflation theory #101, suffice to say it is very affordable. Let’s get back to where you want to go once you get here.