“FOREIGN DOLLAR: THE BEGINNING OF A NEW EXCHANGE RATE?”

Por la Dra Delfina Ryan y el Dr. Cristian Maldonado
dryan@estudiomalis.com.ar – cristian@estudiomalis.com.ar

Argentinian Central Bank authorized tourists last Thursday to bring their dollars through financial market when visiting the country. This new measure will allow foreign visitors to sell their currencies according the “MEP dollar” or “Blue Chip Swap” exchange rate, starting from $180 argentinian pesos per dollar, something that was forbidden before.

Blue Chip Swap is a type of international asset trading in which an investor purchases a foreign asset, usually at a depreciated local price, and then trades that asset in a domestic trade, usually capitalizing on a depreciated exchange rate. It is a common way to operate on a regulated exchange market in order to legally obtain a rate of exchange similar to the free market.

Until now, tourists could only buy pesos legally by using the official exchange rate (about $100 argentinian pesos per dollar). Also, they could have access to illegal ways, such as “informal” dollar which has an exchange rate above $194 pesos per dollar. With this measure, the Argentinian Central Bank aims to stimulate legal transactions and to add a greater offer to the “MEP dollar” market, due to ease upward pressure on the exchange rate gap. Public officials expect to enter this way near u$s 1 billion per year.

The entity arranged that tourists can open a bi-monetary savings bank and have access to financial services, as long as they have a bank account in their home country. This will allow them to change their currencies according the “MEP dollar” exchange rate.

These “savings bank for tourists” can be used for shopping in pesos throughout Argentina, both by debit card and through digital banking applications and to make cash withdrawals in local currency.

Dollar accounts may receive bank transfers from the holder’s original account and cash deposits of up to u$s 5,000. That is the amount of money that banks will be able to offer foreign visitors to exchange according the “MEP dollar” rate. In the accounts in pesos will not be admitted deposits, transfers of third parties or their use to make investments.

Argentinian government hopes with this initiative to encourage the promotion of a greater arrival of tourists since it will offer Argentina as a cheaper destination in dollars. Also, to provide supply to the market of financial dollars, expecting to contain the upward pressure on its prices in the face of a growing demand for dollarization. It is also perceived as a safe way to have spending money for a tourist instead of cash. With the opening of the borders this alternative will show if it is an efficient way to attract tourists to the country.