At a very basic level, the blue dollar market is an illegal currency exchange. From 2010 to the end of 2015, the Argentinian president set a pesos-to-dollars exchange rate that was, more or less, fake. Argentinians could not buy US dollars at the “official” rate. For example, the exchange rate was 8 pesos to 1 US dollar. Argentinians believed the dollar was worth more, say 15 pesos to 1 US dollar.
Out of this, a black currency exchange market emerged known as the “dolar [sic] blue” or Blue Dollar Market. For tourists, their foreign currency suddenly went much further when exchanged on the “blue dollar market” than at a bank or formal currency exchange kiosk. In return, Argentinian pockets were filled with stable currencies such as the US dollar and Euro.
In December 2015, a new president assumed office, and the financial restrictions were lifted, thus mostly killing the blue dollar market. We were skeptical of the blue dollar market for many reasons, and for the first few days in Argentina, we withdrew pesos via ATMs. There was one big problem with withdrawing from ATMs: Withdrawal fees.
The maximum withdrawal amount varied from ATM to ATM. Our highest withdrawal amount was 2,400 pesos (~$160 USD). Regardless of the amount withdrawn, we were hit with a 90 peso (~$6 USD) ATM withdrawal fee plus a foreign withdrawal fee from our bank in the US.
Argentina is a cash-heavy society, and cash was flying out of our pockets. The withdrawal fees were adding up quickly. We were constantly withdrawing cash and really started to consider tapping into the blue dollar market, knowing that the blue dollar market rate was likely close or equal to the floating “official” rate (at the time of visiting, the “official” exchange rate hovered around 15 pesos to one US dollar).
Bored to tears on our one full, rainy day in San Carlos de Bariloche, we found ourselves walking down the main shopping street when suddenly men started yelling at us, “Cambio! Cambio! Dollars! Euros! Cambio!”
We ignored the first couple of hecklers but then Peter made the decision that we should, at a minimum, find out what the blue dollar market rate was, so we randomly chose an “arbolito” (literally translated into “little tree” because they stay in one place for hours and exchange green paper).
He swiftly and quietly led us down a narrow corridor to the door of a fake perfume shop tucked away in the back of an indoor strip mall (as best I can describe it).
He unlocked the door to the perfume shop and invited us inside. We were followed into the shop by a second man who seemingly came out of nowhere. The second man shut the door.
I looked around and noted two shelving units filled with empty perfume bottles, similar to jewelry cases. There was no cash register, no signage, nothing. Just a bunch of empty perfume bottles in jewelry cases.
The arbolito asked Peter what currency he would like to exchange, and Peter answered, “US dollars.” The arbolito said that he would pay 15 pesos to 1 dollar.
This was the “official” exchange rate, but we would not incur any ATM withdrawal fees, so a win for us. The arbolito then asked how many dollars we would like to exchange, and Peter responded, “160 dollars” and pulled out a wad of cash, and I thought, “Oh boy.”
The arbolito reached behind one of the jewelry cases and picked up a plastic grocery bag filled with rolls and rolls and rolls of Argentinian pesos. I think my eyeballs temporarily fell out of my head when he started pulling cash out of the grocery bag. He calculated the amount, they exchanged currencies, and the four of us left the fake shop, walked out to the street, and went our separate ways. It was a surreal experience.
The next step was to test the currency to see if it was real or counterfeit. We went to lunch and paid with the currency. It worked! We immediately regretted not exchanging more money with our arbolito and became determined to find him again, except we could not find him. We didn’t want to take another chance with another arbolito (looking back, we should have taken that chance), so we ran out of cash again and had to revert back to withdrawing money from ATMs.
So there you have it. The blue dollar market still exists. Though you likely will not be able to exchange foreign currencies for more pesos than the “official” rate, you will be able to escape the grips of ATM fees and maximum withdrawal restrictions.
Exchange money at your own risk.
The next post on Argentina is here.
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