:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/EXGRFRQMRFBY5LAJQPZ6GFKNMI.jpg "Due to a measure introduced by the Argentine government, payments with bank cards by non-residents increased by 280%")
Buenos Aires — Visiting Argentina at Easter can be a very enjoyable experience, and to attract tourism a very favorable exchange rate was added in recent years as a result of the persistent devaluation of the Argentine peso. But to make the most of every dollar, it is necessary to understand which is the most convenient form of payment and to know some particularities of the Argentine currency market.
At present, due to the effect of the exchange rate, there are no fewer than a dozen different rates for the US dollar in the country, which makes it difficult for foreign tourists to understand how to pay.
To prevent the dollars of foreign tourists who arrive in the country from feeding the informal market, at the end of 2022 the Argentine government implemented a preferential exchange rate mechanism through which the value of the MEP (electronic payment) dollar is recognized instead of the official exchange rate when payments are made with bank cards.
:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/XUS2G7QZNFFLJABZR3UU7OD3TM.jpeg "Photo: Municipalidad de Córdoba.")
Card payments
Until the end of last year, paying with plastic was not a convenient method for tourists, given the level of the exchange gap, which last year was located on average around 90%, and people could receive almost twice as many pesos on the informal market than what a card would represent against the official rate.
But after the implementation of the new mechanism in mid-December, and after VISA and Mastercard adapted to the measure, the situation has been reversed, and now it is more convenient to use a card for payments than cash.
The entry of foreign currency into the official market by non-resident tourists shot up by 282% between September 2022 and January of this year.
“In January 2023, revenue was $164 million, 282% higher than the $43 million in September 2022,” the government acknowledged in a report presented by cabinet chief Agustín Rossi in Congress.
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“This is due, on the one hand, to the recovery that is taking place in international tourist arrivals to the country, which is already at 80% of pre-pandemic levels, and which is in line with the regional recovery. On the other hand, the impact of the measure can be seen in an increase in the spending of tourists who visit the country in relative terms: in September 2022, $110 entered for each tourist, while in January 2023 $242 came in,” Rossi said.
This strong increase in the tourist expenditure with bank cards clearly reflects that paying with cash is no longer the most convenient option for those visiting Argentina. Today the MEP dollar - the exchange rate that tourists access when they pay for consumption in the country with a card - stands at levels close to 390 pesos, practically in line with the price of the blue dollar, which tourists would access if they wanted to. exchange their currencies in the informal market.
To this must be added that, by paying with a card, tourists avoids having to go to an illegal market, with the risks that this entails, in addition to not having to carry so many bills around. The highest-denomination banknote in Argentina, for 1,000 pesos, is currently equivalent to about $2.50, which means that if a tourist exchanges $100 they would receive 38 bills.
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What is the ‘small-face dollar’ and how to use it
in Argentina, not all dollars are worth the same, although that should be the case.
The oldest banknotes, printed until 1996, are rarely accepted in transactions, and in the informal market they can be taken for a price up to 1% lower than the original value. These are the banknotes that in Argentina are known as the “small-face dollar” due to the size of the faces of the personalities printed on them.
And not only are these dollar bills worth less, but also bills of denominations lower than $100, known as a “small-headed dollar” as opposed to a “big-headed dollar”.
The size of the faces printed on the dollar bills is considerably larger on those minted by the Federal Reserve from 1996 onwards. The “fall from grace” of small-face dollars is linked to the fact that the new versions have additional security measures, which make them more difficult to counterfeit.
Around 2013 and 2014, many of those dollars passed across the border to Bolivia and Paraguay, where they were stamped to verify their authenticity, and the stamp makes the bill worth less in Argentina.
:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/FLPEC5ORHZGC7HLS7QEFGJJRTM.jpg "There are at least 15 exchange rates for the US dollar in Argentina.")
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