The Black Market and Blue Rate: Argentina’s Bruised Economy


Much of Argentina’s charm comes from its emphasis on food and café culture — its love of a mid-afternoon snack or mate with a croissant (medialuna). But this tranqui way of life may have led to a certain level of acceptance and complacency that the government has taken advantage of. While there have been some economic and technological developments under the current president, Cristina Fernández de Kirchner, there has also been rampant inflation and a flourishing black market for dollars.

In 2011, President Kirchner implemented a ban on the purchase of US dollars in Argentina.  While at first glance this would seem counter-intuitive for any country trying to develop economically, most Argentines have historically saved their money in dollars.  With a history of high inflation and unstable currency, the dollar is perceived to be the most practical way to save money because it maintains its initial value, and saving in dollars is a longstanding aspect of the culture.  With limited access to dollars, Argentines have been forced to save in their national currency of pesos.

The problem with Kirchner’s approach to cutting off the supply of dollars is that the demand for a stable currency still exists.  The demand for illegal dollars increased after the ban.  Thus, the black market for dollars emerged on its own.

Credit and debit cards are charged at the official rate, hovering around US $1 to ARG $8.  If a traveler were to use this rate, living in Buenos Aires would become fairly comparable to living in a European city.  This makes the black market for dollars, or the “blue” rate, attractive for both Argentines and foreigners.  US dollars in cash can be exchanged at a rate of about US $1 to ARG $11.  It is mutually beneficial, as Argentines are able to save in dollars and foreigners are able to get a better rate than the official one.

While it may seem dangerous or risky to be exchanging dollars for pesos on the black market, it has become a commonplace practice here in Argentina.  These exchanges can be made at most leather stores downtown or by easily locating stores with an Argentine outside on the stoop muttering “cambio, cambio” on Lavalle or Florida Street.  While most of the stores have a security guard or someone at the door, the transactions are made over the counter and have become a fairly official procedure.  Hundred-dollar bills get a slightly better rate than change.  Most will accept euros as well, but dollars are more commonplace.  There are even mobile services, like Mobile Wechselstube (Mobile Exchange) that will meet a client at a café to exchange euros and dollars at the blue rate.

There are alternative services and sources that have also benefitted from the recent limited availability of dollars.  Money transfer services allow foreigners to transfer money from their foreign accounts to be picked up at transfer offices downtown.   There are companies for almost every country; for example, those with American bank accounts can use Xoom, and those with British bank accounts can use Azimo.  These businesses earn money from currency exchange and high transaction fees.  The rate these services offer is in between the official and blue rate, known as the dólar tarjeta, the “card” rate.  This allows the money transfer services to profit by exchanging the transferred money to other currencies for a better rate than they offered the foreigners to withdraw here in Argentina.  For example, Xoom has in fine print that states, “In addition to the transfer fee, Xoom also makes money when it changes your US Dollars into a different currency.”[1] Alternatively, foreigners can travel to Uruguay to withdraw US dollars from the ATMs, up to a limit of $300 per day.

However, the existence of the black market only perpetuates inflation.  When I arrived in Buenos Aires in early January, the official rate was US $1 to ARG $6.7 and the blue rate around US $1 to ARG $10.  In one week, the blue rate rose past US $11 and kept climbing until late February.  In response, the government devaluated the official rate to US $1 to ARG $8 in order to narrow the gap between the official and unofficial rates.  The government has been dipping into Argentina’s foreign reserves, which are dangerously low, down to $27.74 billion in February, to maintain high levels of government spending. [2]

There is considerable international controversy over the reported Argentine inflation rate, as many challenge that the official reported rate is actually well below the actual rate of inflation.  The International Monetary Fund (IMF) censured the government in early 2013, forcing it to recalculate its reported inflation rates.  Collaboration between the influential Argentinian economic minister, Axel Kicillof, and the IMF produced a new inflation index of 3.7 percent in January 2014.[3]  Kicillof has become one of the most active ministers in the press since President Kirchner’s injuries in late 2013.  Emergency surgery in response to a brain blood clot greatly impacted her media presence, as daily public statements to the press and a once active Twitter presence have dwindled in comparison to her first years in presidency.  In response to the media coverage about the blue dollar and the possibility of increased inflation in February, Kicillof reaffirmed the government’s transparency, and reported that there are no serious economic issues, just challenges to economic development.[4]

Jorge Capitanich, the chief of the Cabinet of Ministers in Argentina, announced at the end of January that those people earning at least $7,200 pesos monthly now qualify to buy up to 20 percent of their salary in dollars, up to a maximum of $2,000 dollars every month.[5][6]  It has had a small but growing effect on closing the gap between the official and the blue rate, as the demand for dollars on the black market decreases.

To encourage Argentines to deposit these dollars into banks rather than hoard them at home, Capitanich also guaranteed that the 20 percent charge due to the Impuesto a las Ganancias income tax will not apply, as long as the depositor does not withdraw the money within the first year of its deposit.[7]  However, the flaw in this guarantee is that most middle and working class Argentines would have to use that deposited money within the first year, thus perpetuating the existing norm of hiding saved dollars in mattresses rather than saving in banks.

One of the most pressing issues currently facing the Argentine government is the question of how to maintain the value of salaries in the face of high inflation.  In December, there were highly publicized police strikes over the low wages in the city of Cordoba that led to widespread looting and crime.  The conflict ended with a 33 percent wage increase beginning in February 2014 to 8,000 pesos.[8]

Currently, the teachers unions of the Province of Buenos Aires are in tense salary negotiations with the federal government.  The unions are arguing that the salary increases in 2014 must be above the rate of inflation, as they have suffered losses for several years in a row.  They have announced that they will only accept at least a 35 percent increase, but the government is only offering an increase of 22 percent.[9]  This is politically significant with the presidential elections in 2015 drawing nearer, as labor unions are some of the most vehement supporters of Kirchnerism.  President Kirchner is constitutionally prohibited from running again, and thus there must be a strong base of support for the Kirchernist policies in order for her preferred candidate to win the presidency in 2015.  In order for Peronism and the Kirchner legacy to continue, President Kirchner must secure the support, and votes, of the unions.

Inflation can be learned from textbooks and news articles, and it can also be learned through experience.  A culture has developed in Argentina of simply earning enough to live, with little to no emphasis on long-term saving.  Due to the fact that pesos lose, or occasionally gain, value daily, many Argentines adopt a mentality of spending whatever they earn in cafés, bars and in-country travel.  International travel has become a distant possibility for most Argentines, as the peso is worth so little in comparison to foreign currencies.  A recent trip to Uruguay showed me how undervalued the Argentine peso is in comparison to the US dollar, and even now the Uruguayan peso.  While most stores accepted both Uruguayan and Argentine pesos as well as US dollars, items cost much less if paid for in US dollars or Uruguayan pesos than if a customer were to pay in Argentine pesos.

As a foreigner, it has been eye opening actually living in and experiencing a country with such high rates of inflation.  The blue and official rates fluctuate daily, making budgeting nearly impossible.  The price of a cup of coffee can range by more than a dollar due to the changing rates and constant mark-ups by cafés and bars to keep up with the cost of doing business.  I am constantly watching the rates, and trying to keep up with the news to know what’s going on and to predict what may happen next week.  It has been incredibly humbling experience, knowing that when I return to the US, I can work and earn money to put away in savings and know that my hard-earned money will be worth about the same amount in a few months — a luxury that Argentines are currently not afforded.


Katie Braggins

International Affairs ’15



[1] “Argentina Fee Calculator,” Xoom Corporation, accessed March 8, 2014.

[2] “Argentine Peso Holds Steady, But Stability Seen Fragile,” Reuters, February 11, 2014,

[3] “Argentina’s New Inflation Index: Pricing Power, ” The Economist, February 22, 2014,

[4] “Kicillof: ‘No Hay Problemas Económicos Graves,” InfoBae, March 9, 2014,

[5] “Podrán Comprar Dólares en El Mercado Oficial Los Trabajadores que Ganen Más de 7200 pesos,” InfoBae, January 27, 2014,

[6] “Argentina Imposes $2,000 Limit on Purchase of US Dollars,” BBC News, January 27, 2014,

[7] “Para Comprar Dólares se Deberá Tener Ingreso Mínimo de $7200 y Se Podrá Adquirir Hasta US$2000 por Mes,” La Nación, February 27, 2014,

[8] Gustavo Molina, “En Córdoba Habrá Resignación de Partidas para Pagar Sueldos,” Clarín, January 5, 2014,

[9] “Los Docentes Bonaerenses Se Declaran en Paro por Tiempo Indeterminado: El Lunes Tampoco Hay Clases,” La Nación, March 7, 2014,

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