This post is all about money. Its one of the most difficult questions, how to access money during traveling. Are credit cards working? Traveler Cheques? Cash? At university my prof always told "Cash is King", meaning that it does not harm to have some cash with you.
Knowing that, we wrote down all countries we want to visit during our journey plus the respective currency as well as the current exchange rate.
For Argentina, this of course was Pesos.
But there is something, we were not quite aware of, its not Pesos which is important to have, but every other currency.
To give a little bit of background:
Argentina had a big crisis economy crisis during the years 1998-2002. Breakdown of the financial system, political instability, resignation of the president Mr de la Rua and so on.
Ever since, the government tries to recover...economy went up again. Status quo today however is the fact, that there are many signes, which especially the "older generation" of Argentina had "all seen before". And experienced their outcome during the crisis.
Right now, the economy is not that good anymore...the increase of the GDP changed to a decrease and there is a big inflation during the last years. Officially speaking, the inflation is at a rate between 10-16% during the last years. But knowing that the Argentinian government got post by the International Monetary Fund in February this year because of the "official data" being made look nicer and also referring to some independent institutions as well as talking to many Argentineans during our trip, the inflation is more likley to be around 25-30%...per year.
Knowing this, two things are not surprising:
Almost everywhere it is possible to pay in Dollars or Euros; some activities we did we had to pay in Dollars; people asking you for Cambio (Exchange) all the time.
Second, Argentina is way cheaper once you pay in EUR or Dollars, as you get a massive discount. This of course makes sense, as it is still a good bargain to give a discount of 15% if you could avoid loosing parts of your wealth facing inflation at around 30%.
As a logical response to that development, people are saving in other currencies than in Pesos. Every car or house sale, every bigger transaction is basically quoted and done in USD. People would even more try to get dollars...BUT...yes there is a but.
6 months ago, the government made it illegal to sell respectively buy Dollars in Argentina. Basically this was implemented in order to strengthen the Peso and to lower the inflation (this is what we understood). If it makes sence? I leave this completely up to you to think about this. For me, most likely not knowing all the facts and basing this blog also on talks with people with no economic background, it does not add up for the moment.
I almost forgot, yes, there is a way to get Dollars...as always, there is a street market for the so called "blue dollars". Official FX rate: 1:5; street rate: 1:8,5.
A further factor is, that this limits people in their traveling...without having cash (and now we are back at the beginning; remembering "Cash is King") their way of having money during their trip is through credit card (with a special tax on top of everything they buy). And this makes it very expensive.
For us, all the above were surprising facts which we didn`t know to that extend. We will follow the development and keeping our fingers crossed, that Argentina will not experience another crisis...!
PS: As stated, the above is a mixture of all we experienced during our time in Argentina in reading, talking, discussing and researching. It for sure does not reflect all factors and all opinions...(haha...some of you might "smell" the disclaimer of responsibility, yes thats what it is :-) ). And yes, we once went to the bank and asked them for Dollars...insistently, repetitively and with a very surprised face we received the "no, there are no dollars here for you"...I think we were the laugh of the day for them :-))).
Knowing that, we wrote down all countries we want to visit during our journey plus the respective currency as well as the current exchange rate.
For Argentina, this of course was Pesos.
But there is something, we were not quite aware of, its not Pesos which is important to have, but every other currency.
To give a little bit of background:
Argentina had a big crisis economy crisis during the years 1998-2002. Breakdown of the financial system, political instability, resignation of the president Mr de la Rua and so on.
Ever since, the government tries to recover...economy went up again. Status quo today however is the fact, that there are many signes, which especially the "older generation" of Argentina had "all seen before". And experienced their outcome during the crisis.
Right now, the economy is not that good anymore...the increase of the GDP changed to a decrease and there is a big inflation during the last years. Officially speaking, the inflation is at a rate between 10-16% during the last years. But knowing that the Argentinian government got post by the International Monetary Fund in February this year because of the "official data" being made look nicer and also referring to some independent institutions as well as talking to many Argentineans during our trip, the inflation is more likley to be around 25-30%...per year.
Knowing this, two things are not surprising:
Almost everywhere it is possible to pay in Dollars or Euros; some activities we did we had to pay in Dollars; people asking you for Cambio (Exchange) all the time.
Second, Argentina is way cheaper once you pay in EUR or Dollars, as you get a massive discount. This of course makes sense, as it is still a good bargain to give a discount of 15% if you could avoid loosing parts of your wealth facing inflation at around 30%.
As a logical response to that development, people are saving in other currencies than in Pesos. Every car or house sale, every bigger transaction is basically quoted and done in USD. People would even more try to get dollars...BUT...yes there is a but.
6 months ago, the government made it illegal to sell respectively buy Dollars in Argentina. Basically this was implemented in order to strengthen the Peso and to lower the inflation (this is what we understood). If it makes sence? I leave this completely up to you to think about this. For me, most likely not knowing all the facts and basing this blog also on talks with people with no economic background, it does not add up for the moment.
I almost forgot, yes, there is a way to get Dollars...as always, there is a street market for the so called "blue dollars". Official FX rate: 1:5; street rate: 1:8,5.
A further factor is, that this limits people in their traveling...without having cash (and now we are back at the beginning; remembering "Cash is King") their way of having money during their trip is through credit card (with a special tax on top of everything they buy). And this makes it very expensive.
For us, all the above were surprising facts which we didn`t know to that extend. We will follow the development and keeping our fingers crossed, that Argentina will not experience another crisis...!
PS: As stated, the above is a mixture of all we experienced during our time in Argentina in reading, talking, discussing and researching. It for sure does not reflect all factors and all opinions...(haha...some of you might "smell" the disclaimer of responsibility, yes thats what it is :-) ). And yes, we once went to the bank and asked them for Dollars...insistently, repetitively and with a very surprised face we received the "no, there are no dollars here for you"...I think we were the laugh of the day for them :-))).
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