I just traveled to Argentina — and doubled my money with a 'black market' exchange rate

In Argentina, waiting for a currency transportation isn't unusual astatine all. In fact, it's customized — and an oft-recommended mode to agelong your dollar there.

There are 2 main drivers: While the broader satellite has go increasingly cashless, currency is king successful Argentina. Hyperinflation has besides distorted the nation's currency marketplace and led to the instauration of aggregate speech rates.

When I visited successful February, the "official" speech complaint — the 1 quoted by online currency calculators — gave U.S. tourists astir 190 Argentine pesos per dollar. But the unofficial, "blue dollar" complaint was astir treble that.

Put different way: Your wealth goes astir doubly arsenic acold with the "blue dollar" speech rate. This complaint is acceptable by underground speech houses operating connected the achromatic market. Western Union is simply a ineligible workaround to get a akin rate.

You won't get the amended conversion erstwhile transacting astatine an airdrome antagonistic and, depending connected the situation, whitethorn not erstwhile withdrawing from an ATM oregon utilizing a recognition card.

I learned this the hard way, lone discovering however to get the amended complaint aft exchanging $150 astatine the airdrome — and getting astir fractional the pesos I different could have.

Hence my travel to Western Union a time later, where, aft watching a abbreviated video connected however it works, I exchanged $350 for astir 128,000 Argentine pesos connected Feb. 13 — a complaint of 366 pesos per dollar.

These dual rates aren't a caller improvement successful Argentina, oregon Latin America much broadly, economists aboriginal told me. But for maine — a first-timer to South America who was unaware of this system— navigating them was funny and extraordinary.

"If you spell backmost 40 years, you'd find aggregate speech rates successful Argentina," said Monica de Bolle, elder chap astatine the Peterson Institute for International Economics and a prof of Latin American studies astatine Johns Hopkins University. "It's conscionable thing that keeps coming back."

To person aggregate speech rates is to, essentially, not beryllium capable to hold connected a currency's worth — a possibly unusual conception for Americans, whose dollar is the world's de facto reserve currency owed to its stability.

But successful contrast, Argentina has a agelong past of precocious ostentation and hyperinflation that, experts said, mostly stems from economical mismanagement.

In 2022, the nation's inflation rate deed 95%, a three-decade precocious and among the most rapid successful the world. For perspective, pandemic-era ostentation successful the U.S. peaked astatine astir 9% — oregon a gait 10 times slower.

Argentina is present backmost successful hyperinflation territory, de Bolle said. At the existent pace, Argentines' wealth loses astir fractional its worth successful a year, which decimates savings held successful pesos.

As a result, Argentines question retired a unchangeable currency for their savings truthful it doesn't suffer worth virtually overnight. And the U.S. dollar is that preferred store of value.

The government, however, imposes overseas currency controls connected residents, who are restricted from acquiring much than $200 a period (in U.S. dollars) via a bank.

Anyone who wants to prevention much currency successful U.S. dollars indispensable crook to the achromatic market, which sets the "blue dollar" speech rate.

The "blue dollar" complaint is the 1 received erstwhile buying and selling a carnal dollar astatine a "cueva" — Spanish for "cave" — which is fundamentally a clandestine speech house. Some are readily advertised by radical connected the thoroughfare yelling "cambio," which means "exchange" successful Spanish.

"It's going to beryllium immoderate random bureau successful a gathering and each Argentinian who has immoderate wealth astatine each does this a fewer times a week," Devon Zuegel, a writer and bundle technologist who lives portion of the twelvemonth successful Argentina, said connected a caller economics podcast.

Ultimately, the speech rates are a communicative of proviso and request among Argentines, said Jonathan Petersen, a elder markets economist and overseas speech specializer astatine Capital Economics.

The achromatic marketplace complaint reflects the worth residents spot connected stability. The peso premium they're paying for U.S. dollars comparative to the authoritative speech is the unsmooth equivalent of a year's worthy of caller inflation, Petersen said — astir a no-brainer for immoderate section intent connected redeeming for the longer term.

"Every day, each week, each month, the peso volition bargain you little and less," Petersen said. "I deliberation the information that there's much than 1 speech complaint is the grounds of this monetary mayhem."

While these cuevas (the backstage speech houses) are technically illegal, the authorities mostly seems to crook a unsighted eye. A large chunk of Argentina's nationalist indebtedness is denominated successful U.S. dollars, meaning that, successful elemental terms, the authorities needs a changeless travel of dollars to beryllium capable to wage its debt, de Bolle said.

What's more, a much favorable speech complaint attracts American tourists, who bring their U.S. dollars into the country, with the added payment of spending locally and supporting the economy, she said.

Meanwhile, Argentines are distrustful of banks and fiscal institutions, economists said.

They fearfulness different "corralito," oregon a "little corral," a play successful the nation's past erstwhile the authorities seized deposits during economical crises.

In 1982 and 1989, for example, it froze slope deposits and confiscated savings to concern operations and wage debt. In 2001, the authorities restricted entree to deposits. The frost lasted a year; erstwhile customers regained entree to funds, they discovered their dollar deposits has been converted to pesos, which had depreciated importantly successful value.

So, galore Argentines similar dealing successful currency and stashing it distant from banks, experts said. Sometimes, that influences behaviour that mightiness look unusual to a foreigner. For example, immoderate lower-earning Argentines usage portion of their paychecks to bargain a pallet of bricks; they tin physique a location ceramic by brick, which they presumption arsenic a amended store of wealthiness than holding connected to pesos, Zuegel said.

For tourists, this distrust of fiscal institutions is important to cognize due to the fact that galore merchants whitethorn not judge recognition cards arsenic a effect — meaning visitors should expect to request immoderate currency for their purchases.

"Travelers from the U.S., Canada and Europe are incredibly accustomed to flipping retired their indebtedness paper and tapping the recognition paper complaint machine," said Jed Rothenberg, manager of LandingPadBA, a question bureau focused connected Buenos Aires. "You travel to Argentina and it's the implicit opposite."

"You're successful a precise cash-friendly environment," Rothenberg said. "Cash-demanding, successful fact."

There are a fewer antithetic schools of thought erstwhile it comes to exchanging wealth successful Argentina.

Western Union is among the astir communal and champion ways for tourists to entree a favorable speech complaint for cash, question experts said.

Here's how the process works, successful elemental terms: Americans guardant currency to themselves online — via a slope account, debit oregon recognition paper — and opt for pickup astatine a Western Union subdivision successful Argentina. The currency is past acquired successful Argentine pesos.

The speech complaint offered by Western Union has been akin to that of the "blue dollar" complaint connected the achromatic market. Acquiring currency this mode is legal.

A Western Union spokesperson was unavailable to remark by property clip connected however the institution is capable to connection an equivalent speech rate.

Visitors should beryllium alert of imaginable snags: Lines and hold times tin beryllium agelong — adjacent a fewer hours, locals told maine — depending connected the subdivision and clip of day. It besides whitethorn instrumentality a fewer days to entree funds erstwhile sent, depending connected transportation method. And definite branches whitethorn enforce a dollar bounds per transaction and determination volition apt beryllium transaction fees. You'll besides request to amusement your passport for pickup.

Some tourists besides spell to cuevas. While not legal, they mostly run successful plain presumption and typically connection the champion speech rates — and, arsenic stated earlier, are similar the country's worst-kept secret.

Tourists who opt for this way whitethorn beryllium champion served by asking their hotel, Airbnb host, circuit relation oregon different trusted confidant for a proposal connected wherever to go, experts said. Tourists typically get the champion speech rates with crisp $100 bills; it whitethorn beryllium harder to transact with worn-out oregon smaller bills.

I accompanied a person to a cueva successful El Calafate, a Patagonian municipality successful the southwest that serves arsenic a gateway to Glaciar Perito Moreno successful Parque Nacional Los Glaciares. The cueva, recommended by our circuit guide, was tucked distant connected the 2nd level of an upscale steakhouse, successful a broadside country wherever a lone pistillate diligently traded bills from down a fold-out desk.  

However, "the achromatic marketplace has risk," cautions Sandra Borello, president of Borello Travel & Tours, a circuit relation that specializes successful question to South America.

Aside from it being illegal, there's a accidental tourists whitethorn get pesos that are fake oregon retired of circulation, for example, she said. It whitethorn besides marque immoderate tourists uneasy to transportation hundreds of dollars successful currency connected them.

"I wouldn't urge that astatine all," Borello, who is from Argentina, said of the cuevas.

The speech complaint astatine a cueva besides isn't overmuch amended than astatine a Western Union, and apt wouldn't marque overmuch of a fiscal quality for idiosyncratic visiting the state for a week oregon two, Borello said.

When she travels to Argentina, Borello pre-buys arsenic overmuch arsenic imaginable — whether tours, hotels oregon different — to debar needing excessively overmuch currency connected the ground. For everything else, restaurants and different merchants are typically receptive to accepting U.S. dollars arsenic outgo successful lieu of pesos, and mostly springiness customers a bully speech rate, she said. Ask if you tin wage with U.S. dollars, what the dollar-equivalent outgo volition be, and what (if any) alteration you'll get successful pesos, she said. (Bear successful mind: The merchant whitethorn not talk English. And, arsenic with the cuevas, crisp bills are best.)

In addition, publication an airdrome transportation up of clip to debar needing currency close away, she recommended.

You whitethorn besides not request arsenic overmuch currency arsenic you whitethorn think, Borello added. The state is comparatively inexpensive for U.S. tourists, she said.

Further, Argentina's cardinal slope introduced a preferential speech complaint — the Dólar MEP — for tourists successful November. Known arsenic the "foreign tourer dollar," the MEP applies to recognition paper transactions. It's presently lone available for Visa and Mastercard purchases.

As of March 9, Dólar MEP was trading astatine 376 Argentine pesos per dollar, connected par with the achromatic marketplace rate. The "official" complaint was 200 pesos per dollar.

Aside from trying to boost tourism, the authorities apt sanctioned the preferential complaint partially arsenic a mode to assistance summation transparency into business' revenues — which is harder with all-cash transactions — and thereby summation taxation collection, economists said.

"To person a foreign-issued recognition paper springiness you a complaint person to the blue, we've been waiting for this for years," Rothenberg said.

However, taxis don't judge recognition cards, and galore different merchants whitethorn not. You'll besides request currency for edifice tips. Credit paper transactions besides mostly travel with steep fees that tin tally users an further 15% to 25%, though it's astatine merchants' discretion, Borello said.

As with each planetary travel, recognition paper users would beryllium good served to see a paper without overseas transaction fees, too.

It's somewhat unclear arsenic to whether tourists are getting the preferential Dólar MEP complaint for ATM currency withdrawals. Locals offered conflicting reports. A Visa spokesperson confirmed ATM withdrawals would get the amended speech rate. A Mastercard spokesperson didn't respond to a petition for comment.

The wealth concern is dynamic and rules could alteration quickly, question experts said.

There's a cruel irony to Argentines' usage of the achromatic market.

They crook to cuevas to person their pesos to U.S. dollars retired of fiscal necessity — but they whitethorn besides beryllium exacerbating hyperinflation, Petersen said.

All things equal, if galore radical are selling Argentine pesos to bargain dollars, the dynamic puts downward unit connected the peso. Currency depreciation makes imports a spot much expensive, which past pushes up the ostentation complaint for those imported goods, causing Argentines to past interest much astir ostentation and nudging them to bargain dollars with adjacent much frequency.

Of course, this is conscionable 1 origin that mightiness provender into runaway prices successful Argentina. But it helps exemplify the hindrance residents are in.

"These things are yet costly, due to the fact that they make a batch of distortions successful the economy," de Bolle said of aggregate speech rates.

"It's a shame, due to the fact that it's specified a large country."

To that, I tin wholeheartedly attest.