Saturday, October 26, 2013

It might be a good time to travel to Argentina... but not for the best of reasons


It might be a good time to travel to Argentina, but not for the best of reasons.

Argentina is an amazing country to visit for its culture, beautiful natural areas and friendly people. But it might be a good time to visit for another reason... the Argentine Peso is devaluing relative to the US Dollar.

Okay, traveling to a country to take advantage of currency fluctuations is probably not the best of reasons to travel. However, if you previously thought that it might be too expensive to travel to Argentina, you might be able to take advantage of a Peso that has weakened 32.5 percent this year in the unofficial market and is now more than 70 percent weaker than the official rate of 5.8533 per dollar.

According to an article from the news source Bloomberg...

The Argentine peso tumbled in the black market to the weakest since May as demand for dollars surges on speculation the government will clamp down on access to foreign currency after Oct. 27 congressional elections. 

The peso fell 1.5 percent to 10.05 per dollar in the illegal currency market at 4:20 p.m. in Buenos Aires, according to prices compiled by Ambito.com. That’s the weakest since it slid to a record 10.45 per dollar on May 5. The peso has weakened 32.5 percent this year in the unofficial market and is now more than 70 percent weaker than the official rate of 5.8533 per dollar. 

President Cristina Fernandez de Kirchner, who is recovering from an Oct. 8 surgery to drain a hematoma in her skull, has restricted dollar sales in the domestic market since winning re-election in 2011 and slapped a 20 percent tax on the use of credit cards abroad. While she has managed to reduce capital flight, the country’s international reserves are being drained at a rate of $1 billion a month and have fallen to a six-year low of $34.1 billion as the country’s energy deficit widens. 

“The government will tighten controls even more by limiting the use of credit cards abroad because we have a serious problem and the government needs the dollars to pay debt,” former central bank president Aldo Pignanelli said in a telephone interview from Buenos Aires. “The question is how much longer can Argentina withstand the draining of reserves.” 

Click for the complete Bloomberg article.


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