In Argentina, an unwavering passion for the dollar

In Argentina, an unwavering passion for the dollar

2023-09-18 22:00:05

The reusable supermarket bag is casually thrown over the shoulder. It seems empty and Olga, 72, looks like one of those passers-by getting ready to stock up on shopping at the start of the weekend, in this middle-class neighborhood in Buenos Aires. Inside the deep plastic bag, however, is $3,000, tied to the rubber band. “I just changed pesos for dollars. I’m saving for a trip »confides this retired civil service employee.

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The sum comes from a jackpot won in a gambling hall. Hoarding the loot in the national currency was unthinkable, because Olga, like all Argentinians, feels that the pesos are melting between her fingers. As soon as you pocket them, you must either spend them or transform them into dollars. The emergency has a name, that of Argentina’s chronic illness: inflation. In August, the country recorded a monthly record for thirty-two years, at + 12.4%. The price surge amounts to 124.4% over one year. What’s the point of saving pesos today if their value plummets tomorrow?

“Dollar savings are widespread in Argentina. This is an everyday currency, which is not the prerogative of experts. The basic question is always: what is the true value of the peso? “, describes Ariel Wilkis, sociologist at the National University of San Martin and co-author of the work The dollar. History of an Argentine coin, 1930-2019 (“the dollar, history of an Argentine currency”, Planeta, 2019, untranslated). Lacking confidence in the peso, the dollar serves not only as a savings currency, but also as a reference, even an exchange currency.

Purchases of movable goods are made in greenbacks, counted using a special machine placed on the transaction table. In advertisements, the price of cars and now the amount of rent are sometimes displayed in dollars, given the instability of the peso. For the same reason, some craftsmen express their quotes in American currency. The banners of television channels and news sites do not stick to the traditional weather forecast: they transmit in real time the value of the peso in dollars. Or rather the different values.

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Since 2019, exchange controls have been established by the government of Mauricio Macri (2015-2019, center right), then reinforced by the current government of Alberto Fernandez (center left). It allows the State to control the official value of the peso. The result is the same as with each currency restriction policy: a parallel, or “free”, rate is created. Currently, the peso is twice as weak as the official rate. A symptom of a complex system, these two gauges coexist with a series of intermediate rates.

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