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Money question - kind of stupid

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League City, Texas
posts: 253
reviews: 6
Money question - kind of stupid

We've been back a few days and had a FABULOUS time in our beloved city. I'm working on a trip report now and I'll post it soon. I could have stayed another month, or forever...

Anyway, I have a stupid stupid question. It doesn't even apply to us since we easily spent all of our pesos and didn't have to think about changing anything back.

BUT. Let's say a US tourist goest to BA and exchanges $1000 US for $AR at the black rate. They'd get around $6000 AR. Now say this tourist has $100 AR left. If they change back at a bank, wouldn't they get something close to the official rate of approximately $4.5 AR? They would get $45 US then. So isn't the tourist MAKING money exchanging pesos to $US if they bought at the black rate and sold at the blue rate? Like I said, this was not an issue for us as we happily spent all the $AR we had.

I know that it is difficult to exchange AR$ to US$ in Argentina, so I am only guessing that a tourist could even get the official exchange rate when attempting this exchange. I KNOW I'm leaving something out of the equation, but what? Thanks, money experts!

Atlanta, Georgia
Destination Expert
for Atlanta
posts: 9,184
reviews: 74
1. Re: Money question - kind of stupid

I leave for BA next week, and was thinking the same. I confirmed with Travelex here in ATL that I can exchange ARS for USD here without showing a receipt, though the rate will be a little worse than the blue rate bc it's Travelex. So maybe if I have leftover pesos I'll make a little money...

League City, Texas
posts: 253
reviews: 6
2. Re: Money question - kind of stupid

I forgot to add... if what I am talking about is in any way shady or harmful to the Argentine economy, I apologize and retract my question. I honestly was just curious and I hope I have not been offensive. Thanks, all.

Portland, OR
posts: 285
reviews: 8
3. Re: Money question - kind of stupid

What you're describing is arbitrage. It's how currency traders make millions of dollars by buying currency at one price and selling it for a high price. Sometimes the difference is minuscule, pennies or fractions of pennies but if you multiply this times a couple million dollars you can make some real money in one or two trades.

If you could buy your currency at the blue rate of 6.4 pesos per dollar (just bought some at this rate from Xoom) yes, you could make money if you sold it to a bank for 4.7. This is what we call arbitrage.

I believe there are restriction on selling pesos which would make this difficult.

Edited: 1:34 am, November 16, 2012
Punta del Este...
Destination Expert
for Buenos Aires, Punta del Este
posts: 3,607
reviews: 14
4. Re: Money question - kind of stupid

Some Argentinians have made good money over the decades of Argentinian inflation and financial crises, finding ways to arbitrage the distortions created by crazy government policies (or policies, like the current currency controls, that are not in themselves crazy but are made necessary by other crazy policies). I believe the term for this in Argentinian slang is "la bicicleta," or "bicycle." (If I'm mis-applying the term, a local can correct me.) As well_travelled notes, what you describe is one form of arbitrage, although difficult to accomplish for most people.

Argentina
Destination Expert
for Buenos Aires, Argentina
posts: 4,446
reviews: 57
5. Re: Money question - kind of stupid

Until a few months ago, tourists had to keep the receipt of the exchange transaction they had made upon arrival (US to AR$) in order to allow them to exchange any remaining pesos back into US.

This must have been done precisely to prevent people from selling US in the black market, and then benefiting of the official rate for buying U$S (or any other foreign currency) back.

Locals can't even buy the amounts they really need when traveling abroad, tourists can't convert their pesos back into US dollars ... (I bet banks, financial institutions and big firms have more sophisticated ways of dealing with currency distortions).

But for the common citizen / tourist? Not possible, in my opinion.

WDC
Destination Expert
for Buenos Aires
posts: 3,277
reviews: 42
6. Re: Money question - kind of stupid

Joyjoy, your questions and comments are never, ever 'stupid'. I think you got good answers (and thanks for the question and answers as it clarifies this issue for tourists to Argentina).

In my travels to less developed countries, or countries with large populations in financial extremes, I have been taken with their idea to have a Charity Pot in the airport where travelers can leave their 'left over' monies in the local currency. I always try to spend down with Christmas do dads and gift trinkets, etc., but would be very pleased to leave Pesos in a Charity Pot for the poor living in difficult conditions.

I am looking forward to your TR, joyjoy.

San Diego...
Destination Expert
for Buenos Aires
posts: 4,397
reviews: 679
7. Re: Money question - kind of stupid

It's not a stupid question at all. The biggest problem/flaw in that is that it's just about impossible for a local OR tourist to buy US dollars at that official rate.

For all intent and purposes, the "white" formal rate is really the artificial and manipulated rate and most people in Argentina realize that.

While it's NOT difficult to get the blue "informal" rate if you know someone. Try buying those dollars back and you will also pay the informal rate to buy US dollars.

Definitely arbitrage is great if you can make it work for you but it's very difficult to buy US dollars at the official rate there.

Portland, OR
posts: 285
reviews: 8
8. Re: Money question - kind of stupid

Where can you sell pesos back for US dollars as a tourist? Does anyone have any examples of what they're buying Pesos for at these places?

I arrive in a few days and sent a couple hundred bucks through xoom but got a great exchange rate. Once I pick it up, I will likely do some more before my time is up in Argentina.

San Diego...
Destination Expert
for Buenos Aires
posts: 4,397
reviews: 679
9. Re: Money question - kind of stupid

well_traveled,

If you have local friends, ask them for a referral to a private money exchange firm they use. Almost all the locals that live there will have connections to a place they use.

The rates fluctuate daily. You can get a general idea of the rates you might get by looking at the "informal" rates on this link:

www.ambito.com/economia/mercados/dolar.asp

Boulder, Colorado
posts: 1,167
reviews: 238
10. Re: Money question - kind of stupid

First of all.....100 pesos is hogwash......not a good example. As marniewdc says: throw it in a charity pot.

However.....I've been "tutored" by a GA, who says"The term "bicicleta financiera" was born in about 1975 and it implies benefiting from extremely negative interest rates in REAL terms, not currency arbitrage. What the OP asks about is impossible, because banks can't sell you any dollars UNLESS you can prove you SOLD some at the official rate when you arrived & even then it would be difficult..My advice to spend any pesos you have left at the tax free shop when you leave, stands."

Personally, if I overcalculate my expenditure of pesos, we shall be celebrating birthdays and anniversaries for the year at La Bourgogne.

Cheers.