Seeking out the “Messi dollar”

Thousands of Argentineans travel to Colonia in neighboring Uruguay to withdraw hard currency and resell cash on the black market

Dollars being exchanged for pesos in Buenos Aires.
Dollars being exchanged for pesos in Buenos Aires.N. PISARENKO (AP)

Radio Colonia announcer Fredys Cabrera says he has not seen so many Argentineans line up in front of Uruguayan banks since 2001, when Argentina put a limit on savings withdrawals during the country's famous corralito scandal.

But this time the situation is different.

In the last 10 years, under the presidential administrations of Néstor Kirchner and his wife and successor, Cristina Fernández de Kirchner, Argentina has experienced 7.2-percent economic growth and unemployment has dropped to 7.3 percent from 17.3 percent.

Nevertheless, in the streets of Colonia del Sacramento, Uruguay, with a population of 25,000 people, about 100 Argentineans line up each day in front of ATMs to withdraw dollars. Colonia's historic center was officially designated by Unesco as a World Heritage Site in 1987, but within the last several months more people have been coming here to take out money rather than take souvenir photographs.

Their transactions are quite simple: the official dollar exchange rate is 5.21 Argentinean pesos.

There are too many people at weekends and on Mondays not all the cash machines have been filled"

But since October 2011, when the Fernández de Kirchner government started imposing currency restrictions, it has been more difficult for Argentineans to gain access to dollars, and almost impossible today at that exchange rate.

Colonia is the nearest foreign city to Buenos Aires; it is only 45 kilometers away and takes about an hour to reach by ferry crossing the River Plate. The boat ticket costs anywhere between 400 and 650 pesos (about 30 to 50 euros at the current exchange rate). After that, everything is clean profit.

After the bank's commission and taxes have been taken out, the dollars pushed out of the ATMs come at a rate of 6.4 Argentinean pesos. But once back in Argentina, a person can resell those dollars to others for more than 10 pesos — double the official exchange rate — making in some cases a 60-percent profit.

As long as the official exchange rate remains stable, people will continue to make a killing on the black market. In February, the dollar hit eight pesos on the black market and by last week it was being sold for more than 10 pesos. The currency has become known popularly as "the Messi dollar" — for Argentina's soccer-playing sensation — because it has no limits.

Going to Colonia has become so much more frequent in recent months that some ferry services have also cashed in by promoting new day trips to the Uruguayan city.

On one recent day, there were 22 people waiting to use a cash machine at 10am on General Flores Avenue. One person went inside with a backpack and took about 30 minutes yet no one complained; people know that customers are going to take as long as 10 minutes to conduct their transactions. Each person has more than one cash card with him, plus others that belong to family members and friends, along with all the corresponding secret codes.

"Tuesdays are the best day to come," said one man waiting in line. "The weekends are the worst because there are too many people, and on Mondays not all the cash machines have been filled."

The last person in line, with 21 people ahead of him, waited four hours before it was his turn. But by then there was an even longer line forming behind him of people who had arrived on later ferries.

A Venezuelan woman, who was waiting with her husband on a nearby sidewalk, said that the difference between the official and parallel rate in Argentina is 100 percent while in her country it is close to 500 percent.

"We are headed down the same route as you," they tell her. "Yes, but the controls are much stricter in Venezuela than in Argentina," she responds. "You have to bear in mind that if you take out dollars abroad that money has already been spent."

Officials in Argentina have also tightened controls and cracked down on the amount of dollars people can withdraw, but the Argentineans have found ways around this.

The major underlying cause for the official dollar restrictions has been Argentina's deficit in energy costs. Last year, Argentina owed more than $10 billion, a figure equivalent to a trade surplus the country also needs so that it can avoid seeking high-interest international loans to help it get by.

That energy deficit could reach as high as $12 billion. The government says it needs all the hard dollars on hand to pay for its energy costs. But Argentineans say they also need dollars to help combat the impact of high inflation. They claim they are not selling the dollars, but only saving them for their own personal use.

The majority of the Argentineans who come to Colonia are middle-class citizens. "You spend a lot of time and energy just thinking how inflation eats up one's salary," said a woman in her thirties. "I am no financial expert, but I would be crazy to accept the interest rates that they are offering on loans. But it is also crazy to arrive in Buenos Aires with a backpack filled with cash and the fear that someone is going to rob you."

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