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ECONOMY | 03-11-2022 12:53

Argentina's government lets tourists tap parallel FX rate to bring in dollars

Foreign tourists who use non-Argentine issued credit and debit cards will be charged a more lucrative financial exchange rate known in Spanish as the ‘Dólar MEP’ (Mercado Electrónico de Pagos).

Argentina’s government is trying to rake in more tourism dollars and discourage cash use by offering travellers who visit the country a more lucrative exchange rate on card purchases, according to three senior government officials. 

Foreign tourists who use non-Argentine issued credit and debit cards will be charged a financial exchange rate known in Spanish as the ‘Dólar MEP’ (Mercado Electrónico de Pagos) in Argentina, priced at about 291 pesos per dollar on Wednesday, according to website Rava. That’s much higher than the official rate of 158 pesos per dollar currently applied to foreign card purchases made in Argentina. 

The Central Bank will publish the measure Thursday and it will take effect Friday, according to the officials, who stressed it would provide more ease and safety to tourists coming to Argentina.  

Battling inflation heading toward 100 percent, the government of President Alberto Fernández has struggled convince travellers to put money into the country’s complex financial system. A measure last year allowed tourists to open up temporary bank accounts, but failed to gain traction. 

Tourists have long preferred cash in Argentina, but the trend has worsened in recent years because of a gap between the official rate and an alphabet soup of different, parallel rates. The Central Bank is only seeing US$30 million a month now from foreign credit card transactions in Argentina, down from the US$250 million seen in prior months, according to the officials. 

Discouraging cash use also comes as scenes have emerged in recent weeks of foreign tourists paying for meals with wads of cash. Many locals and tourists exchange dollars for pesos at the commonly used black market rate known as the “Dólar Blue” which also closed Wednesday at 291 pesos per US dollar. Those cash dollars don’t enter government coffers, watering down the economic benefit. 

Another reason for all the cash is that Argentina’s largest denomination bill is only 1,000 pesos, worth about US$3.44 on the black market, creating a big discount versus the official rate. The Central Bank doesn’t have plans to issue higher denomination bills as it focuses on digital transactions.

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by Patrick Gillespie & Silvia Martinez, Bloomberg

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