Nobody wants pesos: the incredible amount of Argentine currency it takes to buy 1 dollar in Uruguay

Bachelor of Economics (UBA). Economic Analyst of Libertad y Progreso.

INFOBAE – This summer is undoubtedly completely different: far from the wave of Argentines visiting Punta del Este and other classic beaches, the neighboring country considers that the season is lost.

The Uruguayan government is analyzing extending the border closure until February because it considers that there are no conditions that allow it to open, due to the spread of the coronavirus this summer, after having applied the restrictions in January.

However, the price of the peso in banks and exchange houses on the other side of the pond always mark a good reference on the local exchange situation. And the fact is that in this summer without Argentines in Uruguay, buying 1 dollar with pesos can cost up to double what it is worth within the country.

It is known that the US banknote is the “tool” preferred by Argentines to safeguard their savings in recent decades, due to the constant depreciation of the peso and inflation that is among the highest in the world. In fact, last year the Government had to tighten the exchange rate more and more to stop, even, the sale of the quota of US $ 200 per month, requesting justification of income to access them and other requirements.

Because of this, several Argentines thought to avoid these restrictions by crossing the “pond” and going with their pesos to Uruguay, where there are practically no local exchange restrictions, to get the desired dollar amount.

The big problem, beyond the health limitations due to the pandemic, is that the cost of buying foreign currency with Argentine pesos can be worth more than double what it costs in Argentina, since you must have to pay up to an equivalent of $ 292, for every dollar, in banks and exchange houses on the other side of the shore.

An amount that exceeds the domestic price of the solidarity dollar (the official plus taxes) that can be bought in a limited way in national banks and that has a price close to $150. Or, it exceeds the implicit value of the US currency that can be acquired on the Stock Exchange, through the purchase and sale of Argentine stocks and bonds that are listed in both pesos and dollars, through MEP and cash operations. with liquidation, whose cost ranges from $145 per green ticket.

To this is added that for several economists, the local reference of $160 is considered “expensive” for the exchange rate. Even in the informal market, where there are no limits on the amount of purchase, the price that must be paid for each blue dollar is around $ 160, the price of the dollar in Uruguay is up to double what it is worth.

In Argentina, the price of the dollar in Uruguay is up to double what it is worth in Argentina.

In Uruguay, it’s double

So, the discouragement of traveling from Argentina to Uruguay to buy dollars is great, since their value ranges between $243 and $292 per US bill, depending on the Uruguayan bank or exchange where the transaction is made.

This purchase price is reached thanks to the fact that when arriving in the neighboring country with Argentine pesos, they must first be converted into Uruguayan pesos and then transformed into dollars. The purchase value paid in financial businesses for our currency ranges from 0.15 to 0.18 Uruguayan pesos. Meanwhile, the sale price of the US dollar on the other side of the shore is 43.85 Uruguayans for every US $ 1. In summary, this notorious difference that must be paid in Uruguay to obtain dollars is not directly related to those two currencies, but to the low price of the Argentine peso.

The causes of this are varied, the main one is that “nobody wants Argentine pesos” because of their low value. Although there are also reasons strictly related to the exchange market and the exchange flows of currencies. “With borders closed since December due to the pandemic, today in Uruguay there is practically no market for Argentine currency. The exchange houses do not want to buy Argentine pesos and the price that appears on the screens is more of a ‘theoretical value’ ”, Lorena Giorgio, principal economist at Econviews, tells iProfessional.

According to her argument, without Argentines going to Uruguay or Uruguayans crossing into Argentina, for Uruguayan exchange houses “it is not business to accumulate stock of Argentine pesos, knowing that every day it is losing a little more value”, she complete it. The economist Federico Furiase, director of the Eco Go consultancy, completes this: “In general, there is also a situation of spread of the exchange houses to avoid having a great demand for dollars and loading Argentine pesos.”

As for the specifics related to exchange operations, Gustavo Quintana, operator of Pr Cambios, adds iProfesional: “It surely has to do with a problem of crossed exchange rates. It is that I do not believe that in Uruguay they have much market of Argentine pesos to take them against dollars”. And he justifies on this high price of the dollar, measured in domestic currency, in the neighboring country: “It is the premium they ask to keep pesos, because they have to compensate for the scarce market there is for our currency there.

They do not have an application for Argentine pesos, and the procedure to bring them here later is complicated and expensive, so they have no interest in doing so”, Quintana sentence.

Argentines who can save and seek to dollarize their bills, see that doing so via Uruguay It is not a good business. Argentines who can save and seek to dollarize their tickets, see that doing so via Uruguay is not a good business.

From the opinion of Natalia Motyl, economist at the Libertad y Progreso Foundation, there is also a historical reason, which has to do with the national situation. “Buying dollars in Uruguay was always more expensive than in the city of Buenos Aires, something typical of the obstacles that exist in the local exchange market,” she says. In addition, Motyl maintains that a price that can reach up to $292 per dollar in the neighboring country is due to the result of operations carried out with cash, since thus its cost is much higher than “if it were through the exchange market , which in that case would be similar to the one that is being traded in Argentina ”.

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