Argentina has an unfortunate monetary history and an unfortunate way of repeating their monetary mistakes. There are Argentine critics from the late 1800s bemoaning Argentina’s inflationary ways and the complaints sound like they could have been taken straight from the 1980s.
I teach Latin American Economic Development and Argentina is the gift that keeps on giving, still managing to surprise me every once in a while. For instance, I’ve been amazed (as have my students) at the stories about fines and prison time for economists that dare to publish alternative (read: accurate) inflation statistics.
Now, government restrictions on the holding of dollars has turned people’s demand for foreign exchange into a cat and mouse (and dog) game.
A WSJ article (gated, here is an ungated version) documents how Argentines looking to buy dollars must do so on the black market in transaction locations metaphorically called cuevas (or caves). The sellers of foreign exchange are called cavemen.
The government bans people from saving money in dollars and travelers are allowed very little foreign exchange for travel. The author notes that, “Travelers must submit an online request to the national tax authority just days before leaving, and they usually receive approval for much less than they requested.”
Businesses that need to buy foreign imports must get the government’s permission to do so before being granted access to buy foreign currency at the official rate.
But of course, this just results in black markets and corruption. The government has a strong weapon in their arsenal however, namely the dollar-sniffing dog. My question is, do dollars smell different than pesos? Are they especially stinky? Is this all a ruse to cause people to think twice before smuggling dollars? It all sounds pretty suspicious.
They just unveiled the 100 peso bill though with Evita’s portrait so I guess they have their economic priorities straight.