Last updated on October 31
If you are traveling to or from Argentina, you might have Googled how much the peso is worth. And chances are that you didn’t get a straight answer.
That’s because Argentina’s foreign exchange market is far from straightforward. Different administrations have added layer upon layer of restrictions on foreign currency operations over the years, spawning a myriad of different exchange rates.
Since 2019, Argentines have not been allowed to go to a bank and simply buy all the dollars they want. So, they often get them at informal exchange houses at the higher “blue dollar” rate. They can turn to financial markets to get the greenback, but that gives them the “MEP dollar” and “blue-chip swap” rates — though the latter is not the same as the “blue dollar.” Confused yet?
If not, you will be: there are also different exchange rates for credit card operations, which are not the same if you want to pay for, say, a Coldplay concert or Netflix. There are, of course, specific exchange rates for those, called “Coldplay Dollar” and “Netflix Dollar”.
All these restrictions stem from the same problem, an international reserve scarcity crisis, which this year’s historic drought has intensified. At the time of writing, Argentina’s net international reserves are negative US$4.5 billion, meaning the country is beyond broke — in fact, the government would have to raise US$4.5 billion to be broke.
Who can buy dollars at the “official rate”? Why is it called the “blue dollar” if the banknotes are green? Is the “Coldplay dollar” overrated? Without further ado, here is your guide to navigating the murky waters of the Argentine foreign exchange market.
Official exchange rate (Dólar oficial)
The official “wholesale” exchange rate is the cheapest and the largest market. All “wholesale” transactions are done directly with the Central Bank and every other official rate derives its value from this one. “Where can I get this rate?” you may ask. I hate to burst your bubble, but it’s used almost exclusively in international trade.
Compared with the parallel rates, exporters get fewer pesos for every dollar of income and importers have to spend fewer pesos for every dollar of goods they buy. That’s why you often hear of companies getting caught exaggerating their imports — to access more cheap dollars — or under-declaring their exports.
This government has used a policy called “crawling peg” to manage the exchange rate. While pegging a currency to the dollar means setting a fixed exchange rate, the crawling peg means the currency is systematically and gradually devalued by a tiny amount, at a rate set by the government. After years of this, the government finally devalued the peso the day after the presidential primaries, taking the official rate to AR$350 to the dollar. The government plans to hold this level until November.
That remains to be seen.
Savers’ exchange rate or “Solidary” exchange rate (Dólar ahorro or solidario)
The “dólar ahorro” (savings dollar) is the rate Argentines get by just exchanging pesos for dollars at a bank or exchange house into their domestic bank accounts. It’s the official retail exchange rate plus 100%, which derives from a combination of two taxes. The current value of the dólar ahorro is AR$735.5. Savers can claim part of the tax back at the end of the year — if they can figure out the byzantine systems of the tax bureau (There is a seven-step guide in our sister publication, Ámbito Financiero, in case you are interested).
The quota for dólar ahorro enforced by the government of Mauricio Macri in 2019 to suffocate a bank run, which is still in place, is US$200 per month.
However, not everyone can access the dólar ahorro. Scratch that, virtually nobody can. Restrictions on accessing dollars for personal savings are usually called the cepo — Spanish for “clamp.”
The government has forbidden various groups of people from purchasing US dollars. The list is evergrowing and includes; workers whose salaries were partially paid by the government or received emergency welfare during the COVID-19 pandemic; people who are on welfare programs; investors who have bought US dollar bonds or cryptocurrencies; and people whose utility bills are subsidized by the government, among others.
Blue dollar (Dólar blue)
The “blue dollar” refers to cash dollars bought and sold informally. This exchange rate has its own ecosystem — people who sell it on the streets are called arbolitos, Spanish for “little trees.” Informal exchange houses are called cuevas (caves).
Restrictions for buying dólar ahorro are the main reason why Argentines resort to the “blue dollar.” That and the prevalent distrust in the banking system, which deepened after the 2001 crisis when the government limited cash withdrawals at first and then forcibly exchanged US dollar deposits for Argentine pesos.
Because of that, Argentines prefer to store their crisp banknotes at home — last year, the INDEC calculated that they had some US$249.5 billion under their mattresses.
The “blue market” is not big, but most media outlets publish its value and it can be a bellwether of the economic mood. Depending on which side of the political divide you are on, the “blue dollar” can be called “free dollar” (since it’s how citizens can access the currency without any restrictions) or “illegal dollar” (as it is technically illegal, although the government somewhat tolerates it).
There’s no consensus on where it got its name. Some say it refers to a special marker used to detect counterfeit bills which, when used on dollars, turns them blue. However, most people agree that it is called “blue” to avoid using the term “black market,” which could be interpreted as racist. So this could mean this illegal exchange rate is…kind of woke?
MEP dollar and blue-chip swap rate
There is yet another way Argentines access the treasured exchange rate — purchasing and then selling national sovereign bonds. The maneuver consists of buying peso-denominated bonds in the financial and then selling them for dollars. The implicit rates of exchange at which those operations are carried out are the “financial exchange rates” — the MEP dollar, if they are done in the local market, and the blue-chip swap rate if they are done in the international market (in these cases, the money ends up in foreign bank accounts).
That may sound complicated, but the appetite this country has for the greenback and the ongoing restrictions are increasingly more people investing in the market through various apps. Once relatively obscure terms, “MEP” and “blue-chip” are now mainstream and in the last couple of years, everyone’s become a trader.
“Netflix” and “Qatar” dollar
But US dollars aren’t just for savings under the mattress. Sometimes, Argentines need to pay for things that are priced in dollars with their debit or credit card, namely streaming services, travel expenses abroad, or that really cute 1-1 scale My Little Pony figurine that I saw on eBay last night. Enter the “card dollar”, also called “tourist dollar”— its value is the same as the “saver’s dollar” (AR$735.5).
Until October 10, the government had differentiated exchange rates popularly called “Qatar” and “Netflix”for overseas and domestic expenses respectively. The “Netflix” name is pretty self-explanatory, and the “Qatar” dollar was enforced in late 2022 when Argentines traveled en masse to a certain West Asian country to watch a certain sports event.
However, the government unified the values for the Qatar, Netflix and ahorro exchange rates. Since then, you get the same exchange rate whether you watch the heartless 2022 remake of “Pinnocchio” or go hug a Disney World cast member dressed as the wooden puppet in Florida. Which is a normal state of affairs, I guess.
Foreign tourist dollar
Although technically not another exchange rate, the “foreign tourist dollar” is a measure launched by the government that allows tourists — or anyone with a foreign credit or debit card — to get their purchases in the country processed with the MEP rate. And no, it’s not the same as the regular tourist (or Qatar) dollar. Before the foreign tourist dollar was introduced, purchases were processed at the official rate (approximately 96% less).
The government did this as a way to make the country cheaper for tourists and dissuade them from dangerously spelunking in dangerous “caves” or climbing “little trees.”
When Coldplay sold out nine concerts in Buenos Aires last year, people started wondering which exchange rate they would use to take home the pesos thousands of Argentines paid to listen to “Fix You” or “Viva La Vida”?
The rules would imply that it was the official rate, but businesspeople in the entertainment industry protested and got a special exchange rate of the sector, which was the official rate plus 30% (AR$455 at the time of writing). They could have settled for the official rate, but hey — if you never try, you’ll never know just what you’re worth.
Temporary exchange rates
Sometimes, the government launches exchange rates with expiry dates. For example, the “Vaca Muerta” dollar and the various iterations of the “agro dollar” or “soybean dollar” — beneficial rates aimed at oil or agricultural exporters that are higher than the official exchange rate. However, with the proposals of dollarization or “rapid exchange rate unification” some candidates are making, all of these exchange rates could soon be destined to the great rates chart in the sky.