Argentine “dollar tourists” flock to Uruguay

For decades, Argentine tourists traveled to Colonia de Sacramento in Uruguay to spend their money. Now they come here to take it away.

The crowds would rather line-up at the cash machines than enjoy the traditional yerba mate tea in this coastal town.

Argentines wait for hours to fill their backpacks – not with the souvenirs from this popular South American destination, but with dollars.

And there are few things they love more than a US greenback.

It is virtually impossible to get them legally any more in their own country.

Argentines coming to Uruguay are well aware of the twists and turns of their national economy.

So they have traditionally kept their savings under the mattress in US currency, as a way to cope with uncertainty and a high inflation rate.

Here, unlike most of the countries in the region, tourists can get US banknotes from the cash machines, even if they don’t have an American bank account.

“This is dollar tourism. They get off the River Plate boat and they start getting dollars from the cash point at the harbour,” a Uruguayan businessman says.

“They come here with several credit cards from friends and family, they take the money and then they take another boat to go back to Buenos Aires.”

He complains that the restaurants are empty, while the cash machines are exhausted.

Locals who need to pay their rent or their employees’ salaries have to go to the bank up to three or four times a day.

“It’s so annoying to wait in line until we find a cash machine with money left from the Argentine raid,” says his friend, a businesswoman.

None of them wants their names to be published, as they might lose the few Argentine customers they still have.

Dollar dependency

For Argentines, Uruguay looks like a dream come true. And Colonia, the closest town to Buenos Aires by boat, is their very own Eldorado.

To them, having dollars seems like a safe and reasonable response to their country’s 10% official annual inflation rate – although private firms warn the actual rate might be more than 25%.

Since 2011, only a few Argentines travelling abroad are entitled to buy dollars in limited amounts, and savings accounts in currencies other than the national peso are no longer allowed.

The government of Cristina Fernandez de Kirchner says it needs these tight controls on the dollar market in order to keep paying its outstanding debts arising from the 2001-02 peso collapse.

Regarded as a pariah by financial orthodoxy, Argentina has been unable to borrow on the international markets since then.

Therefore it has been using money from its central bank reserves to pay the debt.

Bill hunting

In early May, the government announced a tax-free scheme for Argentines to invest their stored dollars in national industries.

The state is as hungry for dollars as its citizens, who are looking for new – and very often illegal – ways to get the precious notes.

That includes travelling to Colonia de Sacramento.

“I need to repay a debt in dollars, but all doors seem to be closed. It’s not cheap to come here, but at least it’s cheaper than buying them in Argentina,” one of the cash machine tourists says.

He waits patiently in the queue, but also refuses to have his name published, fearing the fiscal authorities back home.

Although it is legal to get money from Uruguayan cash machines, keeping dollars to save them back in Argentina – or worse, trade them on the black market – is not.

Nobody knows for sure how much is spent in Colonia de Sacramento and how much is then smuggled into Argentina.

But fearing that Argentine capital might be flying out through Uruguayan cash machines, Buenos Aires authorities have tightened surveillance at customs and immigration offices in the harbour.

Messi dollar

For many, it is still worth the risk to make thea one-day dollar trip to Colonia.

They still have the chance to buy dollars in the Argentine black market, but it is not cheap.

A single dollar bill costs about nine pesos on the “blue market”, which is what Argentines usually call the illegal currency trade.

That is more than 60% higher than its official exchange rate of 5.20 pesos.

After the blue dollar spent weeks close to a new high of 10 pesos, many in Argentina nicknamed it the Messi Dollar, in homage to Argentine-born footballer Lionel Messi, who wears the number 10 shirt for Barcelona.

The ups and downs of the Messi dollar are headline news for Argentine media giant Clarin, which blames the unofficial parallel currency system on government economic policies.

But the Kirchner administration, in its turn, accuses Clarin – which has become one of her government’s fiercest opponents – of trying to destabilise Argentina’s finances and investment prospects.

A matter of trust?

The government in Buenos Aires has been putting pressure on the black market in an effort to keep the rate down – and it seems to be having some effect.

The blue dollar has dropped from 10 to nine, but it is still unaffordable for most Argentine savers.

“No matter what restrictions the governments tries to impose, my clients will always want dollars,” says Santos, an illegal currency dealer in Buenos Aires.

“They don’t trust their currency or their politicians,” he adds.

Given the depth of Argentina’s love for the dollar, there is little hope that this will change soon, as you can tell from the long queues at the port of Buenos Aires to buy a ticket for a boat ride to Colonia de Sacramento.

Argentines are lining up to fill their bags and punish their credit cards – willing to go to the ends of the earth to get their fistful of dollars.