A beginner guide to currency exchange rates in Argentina (UPDATED 2022)

A Guide to Currency Exchange in Argentina

Currency exchange rates are on everybody’s lips in Argentina. You don’t have to spend a long time in Argentina before you realize that. The Argentine peso’s rate compared to the American dollar is a topic of small talk in the street and very frequently discussed in the Argentine media too. 

Since 2019, the Argentine pesos’ exchange rate to the American dollar has been even more confusing since a parallel official and unofficial exchange rate system was installed. This means that there are actually two exchange rates to keep track of, and the difference between them can get as high as 50%.

But what does all this mean? Why is it so? Why it is important for you when traveling to Argentina?

In this beginner guide to currency exchange rates in Argentina, I want to give you a short introduction to one of the most discussed issues in Argentina: The Argentine Currency Exchange.

If you are looking for more practical tips about how to exchange your money in Argentina check out this post.

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A beginner guide to Argentina's currency and gives you the why's and the how's to understand the fluctuations of the Argentine peso.

I’m from a country where our currency is stuck to the euro at a fixed rate with a tiny plus/minus percentage fluctuance. So, living in Argentina for the past almost 6 years has been one big class in macroeconomics. This might sound boring but when you live with it every day, you get another interest in it and learn about it in another way.

This is a super complex topic. There have been written many many academic articles about this theme. I’m no expert in exchange rates – I simply became fascinated with the topic from living in Argentina. So, this will be a very light little pocket guide, but hopefully, it will also help you understand Argentina better.

The basic of currency exchange rates in Argentina

A country’s exchange rate is the value of the currency compared to other countries’ currencies. The exchange rate determines the relative price between foreign and domestic goods. 

The exchange rate is affected when a country suffers high rates of inflation (i.e. price increases). Both the exchange rate and inflation are affected by the money supply in a country’s economy. 

An increase in inflation might cause a country’s currency to depreciate e.g. lose value compared to other currencies – which is what has happened over and over again in Argentina!

Apart from that, decreasing exchange rates might also be a sign of decreasing investor confidence in the local market.

In Argentine media, they normally compare the Argentine peso to the US dollar. However, if you are wandering the streets of any major Argentine city to exchange into Argentine peso, you will see the peso compared to a wide range of other currencies. And you can easily exchange most major currencies at the exchange offices.

However, if you have the option to bring US dollars with you to Argentina, you might get a better rate than with other currencies. The US dollars are always in very high demand in the Argentine economy because most Argentines have their savings in dollars.

The exchange rate of the Argentine peso is a floating exchange rate. A floating exchange rate refers to the rate of a country’s currency being determined freely based on the demand and supply conditions in the market. The Central Bank should not intervene in the exchange rate. Nevertheless, due to the insane fluctuation in the Argentine peso, the Argentine Central Bank tends to infer anyway by placing limits on the exchange rate.

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Why are currency exchange rates such an issue in Argentina?

It is a super hard question to answer! And if we had the answer on how to stop the crazy peso fluctuations, we would properly be heroes in Argentina by now!

As mentioned above, a country’s currency exchange rate reflects both its inflation rate and the investor confidence in this local market, and what is happening in Argentina is a combination of those two factors – among many others, actually. 

A depreciation of a country’s exchange rate will make products listed in a foreign currency relatively more expensive. This decreases the general Argentine public’s purchasing power when going abroad or buying products from abroad. Similarly, it makes the purchasing of imported foreign goods more expensive in Argentina. Also decreasing the local Argentine purchasing power.

Countries want to keep their exchange rate as stable as possible. Since it is assumed to help promote trade and investment and thereby create more economic stability.

These are just some of the reasons why the Argentine peso’s exchange rate is such a huge issue.

A bit of history about exchange rates in Argentina

Argentina has a long history of economic instability. After the democratization in 1983, Argentina struggled with hyperinflation. The government and Central Bank could not get it under control, no matter how hard they tried. 

The 1990s

In 1991, the government took a radical step to drive inflation out of the economy. Argentina adopted a Currency Board, which tied the Argentine peso to the US dollar at a one-to-one parity. The introduction of this Convertibility Law was successful and broke with the inflationary dynamics. Little by little, inflation started to decrease.

However, around 1995, economic growth started to decrease. The Argentine economy saw itself hit into another recession. This and a variety of external factors resulted in the collapse of the Currency Board. And in 2001, Argentine has to stop the Currency Board. The country hit state bankruptcy, and heavy political and social turmoil broke out. Nowadays referred to as the 2001-crisis, and it is still very present in the mind of most Argentines.

Since the 2001-crisis, Argentina has been haunted by the ever-increasing inflation and devaluation of the Argentine peso.

The 2000s

In 2003, the Peronist party’s candidate, Nestor Kirchner won the presidential elections. In the following 12 years until 2015, Nestor and his wife Cristina Fernández de Kirchner ruled Argentina. Under their government, they implemented trade restrictions that aimed at protecting the national industry. The official currency exchange rate was kept artificially down while the unofficial currency exchange went through the roof. Inflation also increased dramatically.

In 2015, a new era was assumed to begin in Argentina when the center-right candidate, Mauricio Macri won the presidential elections. However, Macri was also unsuccessful in adjusting the Argentine economy.

Even though his government focused on ending currency restrictions and letting the peso float freely (or with minor political interventions), the Argentine peso was also on a wild ride during Macri’s government.

In 2019, the Peronist party won the presidential elections again, and once again installed currency restrictions. Once again, two parallel currency exchange rate systems are operating in Argentina. An official exchange rate, which is held artificially low, and an unofficial (also called “blue”) exchange which floats a lot more. Read more about it here.

How do exchange rates affect you when traveling to Argentina?

When traveling in Argentina the depreciation of the Argentine peso will usually mean that your currency will be worth more, i.e. you will be able to buy the same Argentine pesos (or stuff in pesos) for a small amount of your own currency. 

This means, of course, that traveling in Argentina will become cheaper for you.

How do exchange rates affect you when living in Argentina?

If you are earning your salary in another currency (usually, USD or Euro) or living on your savings in another currency, exchange rate fluctuations will have the same effect on you as if you were traveling: your currency will make it possible for you to buy more stuff in Argentine peso than before the depreciation.

However, if you are living in Argentina on a salary in Argentine pesos, the depreciation of the peso will make your salary worth less if you go abroad. A situation most Argentines face, and the reason why many will do their savings in dollars.

Tips on managing exchange rate fluctuation when in Argentina

  • Don’t carry too many Argentine pesos – only take out/exchange the amount of money you will need
  • Check the current exchange rate at ambito.com which gives you both the official exchange rate and the unofficial one.
  • Take some time to track down the best exchange rate in the exchange offices – they vary quite a lot! Read more here on how to exchange your money in Argentina!
  • Keep in mind that there are both official and unofficial exchange rate offices. And the unofficial tend to have better rates than the official – read more!
  • If possible, bring US dollars in cash – the demand is usually higher, and you will get a better rate for them.

Are you aware of the situation of the currency exchanges of the countries that you travel to? Did you know about the situation of the currency exchange rate in Argentina before reading this post? Did you find the post useful? Please let me know what you think by dropping your comment below!

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4 comments

  1. Ertan

    Hello Rebecca, thank you for sharing your experiences & i hope that you re doing well since the last post. I am moving to the south america from İstanbul Turkey in september and i was wondering that how the currency increse changed the rent prices for flats in BA? i am an artist and i am going to need a place to stay and work mu art as huge size paintings , and i am trying to give best decision about where to go and stay for next few years and learn spanish. i ll be glad for any ideas & reccomendations & experiences you share. Take care & stay positive ??

    Reply

    1. Rebecca

      Hi Ertan,
      Thank you for dropping by my blog! I hope you found some useful information about Argentina and Buenos Aires here 🙂
      Yes, the Argentine pesos fluctuantions are affecting the price of rental places. Generally, you’ll see in rental annoucements for BA that the owners estimates between a 10 to 15% increase in the monthly rent every 6 months. Inflation (e.g. price increases) is also playing a big part in everyday life in BA, and it worth taking into account before moving here. As long as you make money abrod or have savings from abroad, and the currency situation is as it is at the moment you should be fine for living in BA. But you should be prepared to experiencing price increases in everything if you stay for a long amount of time.
      I hope this helped a bit about your doubts. Take care! All the best!

      Reply

  2. Thomas Barnard

    I have been traveling to Buenos Aires since 1997. Usually staying from 1 to 3 months in the summer months, January to March. When I first came down there was parity for the peso with the US dollar. 1:1. You can see what 20 years has done to the peso.

    I hate to say it, but the government has gone over the top with what conservatives in the U.S. call “free stuff.” Free healthcare, free education through university, mass transit fares of $.40 (compared to $2.25 in Chicago), subsidies on electric, pensions. They cannot afford it all, and have had to borrow. $50 billion from the IMF. But once you give away enough “free stuff,” it is next to impossible to claw it back. A million people protested in Chile when they tried to raise mass transit 10 cents.

    One way to solve the problem would be to fire up business in a huge way. More employment means higher incomes means more tax revenue. But under Cristina Kirchner business was attacked. Many in Argentina are afraid of becoming the next Venezuela. Sadly, the new populist regime does not appear equal to the job, but we will see.

    Thanks for your solid insights.

    Reply

    1. Rebecca

      Thank you so much for dropping by my blog and taking your time to leave a comment, Thomas! I highly appreciate the insights you have on the Argentine economy.

      Yes, you are completely right. The Argentine governments have for a long time promoted the development of welfare state-like benefits without having the economic foundations for doing so. Generally, any kind of beneficial social policy is hard to implement than to withdraw – in any democracy, not just to Argentine, due to the possible political costs of withdrawing. But basically, the lack of foundation is the worth part in my opinion (after all, I´m from a country with a lot stronger welfare state than the Argentine trying to (e.g. Denmark)).

      We cross our fingers and await what the new government will do.

      Thank you for sharing your insights with us! I hope you’ll have an amazing time next time you drop by Buenos Aires.

      Reply

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