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Argentina's black market currency traders brace for uncertainty

Published 11/20/2023, 02:13 PM
Updated 11/20/2023, 02:17 PM
© Reuters. FILE PHOTO: A black market money exchanger known as "Arbolito" works in downtown Buenos Aires, Argentina, July 4, 2022. REUTERS/Agustin Marcarian/File Photo
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By Alexander Villegas

BUENOS AIRES (Reuters) - In downtown Buenos Aires a small group of black market money traders, known as "arbolitos" - or little trees - shouted for business on Monday, a day after a libertarian outsider pledging to dollarize the economy won the race to be president.

The long-running but illegal trade in dollars is in the spotlight amid the rise of far-right Javier Milei, in a country where most people have little faith in the embattled local peso amid triple-digit inflation and rapid depreciation.

Strict capital controls on official currency trading limits formal access to dollars and has spawned a wide array of parallel rates where dollars trade at a huge premium, over 900 pesos per greenback versus 350 at the official rate.

On Monday, the streets were quieter than normal due to a local bank holiday and as people recovered from the election shock, but some "little trees" were selling dollars at between 920-950 pesos per dollar, similar to last Friday's level.

Marcelo, a vendor who asked only to be identified by his first name, said his associates were selling dollars at 920, down from a price of 950 they charged on Friday, citing signs of the peso gaining value in crypto markets, the only ones trading.

He expected more strengthening on Tuesday and thinks the peso will reach 870 or 860 per dollar, an optimistic call with most analysts expecting Milei's win to pressure the currency.

Nicolas, a younger vendor a few blocks away, estimates the peso would remain steady until Milei takes power in December.

Many though said they had no idea what tomorrow would bring as the markets reopened, with the peso having slid fast this year in all markets and a devaluation expected in the weeks ahead after a sharp readjustment already in August.

For some, the uncertainty came hand-in-hand with hope that Milei's ambitions, including dollarizing Argentina's economy and closing the central bank, would bring more financial stability to a country that's seen poverty top 40% this year.

"I want to have dollars," said 24-year-old Milka Car, a university student who also works as a money changer in Buenos Aires. "We depend on handouts from tourists, like if we were in a zoo. There are a lot of young people that don't have any opportunities."

Even if dollarization would take away her money trading work, Car hopes it would bring better salaries and opportunities elsewhere. Aside from studying and selling dollars, she works in a jewelry story, teaches math, and does graphic and web design.

© Reuters. FILE PHOTO: A black market money exchanger known as

She added that she had voted for Milei and celebrated his victory last night over hopes about the economy, even though she is worried about his plans to slash public education.

"It's hard, almost impossible for an Argentine to build themselves up and get somewhere," she said.

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