Written for The Telegraph, 29 Jan 2014
Argentina’s economy is not easy to write about. I’ve had to rewrite this article 15 times. Not just because of my shoddy writing, but because of the shoddy state of the economy.
When I started putting pen to paper at the end of December, the exchange rate was 6.5 pesos to the dollar, yet last week it hit 8.5 pesos. Every time I reopen my laptop the rate has changed. On the verge of yet another economic crash you might suppose? Obviously, it’s Argentina.
This is a fact faced by everyone, expat and local, and probably explains the nation’s curious financial habits. The fragility of the value of the peso makes it – as my local friend says – a ‘hot potato’ currency: “No one wants to have it in their hands too long”. The longer you sleep on it, the less it means in the morning. There’s no point making any crude comparisons to the reputation of Latino lotharios, but this temporal nature of monetary value does make life here a lot of fun at the beginning of the month.
The biggest economic lesson I’ve learnt since moving here five years ago is that you should invest in stuff. Stuff will always be stuff, whereas you can’t say the same for money. When payday rolls around, the shopping centres are swarming with people investing in furniture, household goods, food, even cars and property. My friends completed payment for a new big house recently by swapping a smaller apartment and a car with the other owners. There were a few thousand pesos thrown in to sweeten the deal but they were mainly to pay the commissions of the real estate agents. In business transactions it’s also common to accept canje, a payment in goods rather than money. It’s the stuff you own that counts, not the cash.
While this means your friendly neighbour will always come up trumps whenever you need to borrow something, it also means people hoard a lot of junk. You don’t need to step further than the roadside to see cars that resemble hunks of junk being propelled around in a puff of black smoke. Even with an exposed spoiler and two missing doors, an old car is still worth more than its weight in pesos.
The soaring inflation is denied by the government, much to the annoyance of the IMF. Government statistics say it is only 10 per cent, while unofficial estimates are closer to 30 per cent. This means that the largest bill on offer – the AR$100 peso bill – is now only worth £7, or £4.50 on the unofficial rate. This makes buying a beer in cash (AR$40) reasonable, but trying to buy a fridge-freezer in cash for example (AR$6,000 for a mid-range model), becomes far harder, requiring big pockets, a rainbow and a leprechaun.