People In Argentina Are Living Like Moguls Thanks To The Currency Black Market
Now, Bloomberg has two eye-opening follow-ups detailing this trend in Argentina.
Camila Russo reports people are flipping dollars for as much as 9.7 pesos on the local black market, compared with the official rate of 5.9, and living like moguls.
On of the more prominent displays of this: locals now enjoy 39% discounts on Porsches and other luxury cars.
As a result, she says, auto sales are heading for a record 930,000 this year, with imported cars accounting for 60% of that figure. At 170% growth, Tata's Land Rovers saw the largest jump in sales, Russo says, with Alfa Romeos, BMWs and Porsches also seeing growth of at least 75%. "They just come and leave with a new car because it's become a very good deal with the gap in the exchange rates," a local BMW sales exec tells Russo.
Meanwhile, Bloomberg's Eliana Raszewski caught up with a visiting French doctor fresh off visiting a local currency flipper (they're called "Arboletos" because they're a "fixed part of the landscape." ) in Buenos Aires. As he "stuffed pesos in his pocket," he explained how he and his family were taking a three-week vacation and planned on touring Argentina's Malbec country. "I know the risks, but so far I've never had problems, I try to be careful...Changing dollars in the streets is worth it," he said.
The scheme has blown a hole in Argentina's dollar reserves: Russo says they've plummeted by $10.6 billion in 2013, the steepest decline since 2002 (which was one year after Argentina's infamous default). The current level of $32.7 billion is the lowest in seven years. The country is also tapping dollar reserves to pay off its debt, default protection on which is now the most expensive in the world.
Argentine officials are trying to address the problem, with amusing results: car importers are now forced to export Argentine-made products to help compensate for the dollar declines they're fueling. So now, the local Porsche unit is shipping wine, Mitsubishi is exporting peanuts and Subaru is selling chicken feed to Chile.
Click here (for Russo) and here (for Raszewski) to read the full stories on Bloomberg.