How does the economy of a country with two currencies function? Not very well in short. A small glimpse of Buenos Aires’ microcentro at night, heaving with cartoneros scrounging through bins for whatever remains they can find, goes some way to confirming the grim reality of life for much of Argentina’s population. However as a British student, fresh from a summer working the minimum wage in cardboard box factories and shovelling cow turd, the outlook is slightly less bleak given the bizarre parallel market for buying and selling pesos that currently exists in Argentina.
The country is no stranger to crisis and bar a few years of stability at the start of the millennium, many of my Argentine contemporaries only know their country to be in the economical gutter. With strict controls on the freedom with which one can obtain dollars (and other foreign currencies) and inflation at nearly 40% annually, the national currency, the Argentine peso (ARS$), is fast becoming as valuable as bog roll. Understandably desperate to avoid huge personal financial losses, people in Buenos Aires and right across the country have started to buy, and subsequently save, strong foreign currencies at rates higher than those published by banks and official change houses. This informal market, known as the dólar blue, represents a much more realistic value of the Argentine peso and for the tourist puts many more pesos in their pockets. In other words, the locals know just how crap their currency is that they ignore government controls and willingly pay more for the security of having savings in a foreign currency.
Above: Blue dollar (approximately 13.5 pesos is exchanged for a US dollar on the street) and official dollar rates (approximately 8.5 pesos is exchanged for a US dollar in a Bureau de Change or from an ATM) for January 20th 2015.
It’s a thoroughly confusing situation all in all, however Ronald McDonald and ample quantities of dodgy hydrogenated fats serve as an example of how ridiculous the current situation really is.
The Economist publishes a popular feature known as the Big Mac Index, which essentially details the price of McDonald’s signature burger in countries across the world: in comparing the price of a single commodity the index shows whether a currency is over or under-valued at that time. The most recently published index in July 2014 showed that the local price of the Big Mac was ARS$21.00, which with the official exchange rate above implies a US$2.44 sandwich.
Hold tight though.
Considering the current rate of the dólar blue, a more realistic price for the Big Mac in Argentina is a measly US$1.54, making it the second cheapest in the world behind Ukraine. Consequently many of the company’s restaurants have been quick to hide the Big Mac from the menu, instead plugging the Triple Mac for ARS$61.
All of this noted, it gave me great pleasure this afternoon to stroll into McDonalds Avenida Cabildo 2325 and to follow a well recounted recipe by journalists and tourists alike: order THREE Big Macs at ARS $21, deconstruct them, reconstruct them into TWO Triple Macs, see them both away and roll down the hill home knowing that ARS$2 (10p) aside, you’ve robbed robbed McDonalds Argentina of a Triple Mac.
Aside from facilitating possible obesity and heart disease, Argentina’s economic woe has played greatly into my hands as a foreign student and has made day-to-day living a great deal cheaper than I became used to in Edinburgh. My half hour daily commute to work costs a meagre ARS$3.25 (15p) as opposed to a £1.50 single with Lothian Buses, accommodation in the ‘Mayfair’ of Buenos Aires came in at £170.00 a month rather than the £400.00+ that New Town inhabitants are robbed of monthly and for evenings on tour a 1 litre bottle of Hiram Walker vodka sets one back only ARS$40.00 (£1.90), a fair saving on the £14.99 I am reliably informed that one pays for 750cl of Smirnoff vodka at Tesco Express on Picardy Place.
Despite its’ hopelessly corrupt government, wide spread general chaos and slightly ridiculous currency, Argentina is a country I feel very fortunate to have been able to call home for the last five months. From the deserts of the north, to the cold of the south and the thousands of kilometres of Pampa in between, it really does seem to have it all and is a country that I would recommend to anyone without hesitation.