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  HOME | Argentina

Argentina’s Obsession with the Dollar, a Vicious Circle amid a Crisis

BUENOS AIRES – In the bars, stores, at lunchtime or when school’s out, a lot of Argentina is asking itself the same question: How much is the dollar worth today?

The answer is capable of sending shock waves across the nation, battered by repeated crises with the currency as the main protagonist that has the country’s economy stuck in a vicious circle.

Like the tango, soccer and barbecue, the dollar has earned a spot among Argentina’s beloved traditions in a society obsessed with a currency that is not its own, but which has been adopted as the best method to hang onto savings and get away from the weak and unstable peso.

When the value of the US dollar increases, particularly when this happens suddenly, two things happen in Argentina: as the national economy, based on pesos, weakens and inflation goes up, the dollars stashed away by savers remain safe.

“It’s an aversion to the peso, we don’t want pesos in our pockets,” one of the many Argentinians passing through the main banking district of Buenos Aires, which houses many foreign exchange bureaus, said.

At 10 am, when these currency traders open, and above all during times of recession, a cloud of uncertainty lingers over the country for the five hours of market activity. On critical days, the exchange rate can undergo sharp lurches.

Television channels will place small windows somewhere on the screen so that viewers can follow the developments live.

“In Argentina, knowing the value of the dollar four years ago could be the winning question on a TV quiz show,” Mariana Luzzi, a sociologist who along with her colleague Ariel Wilkis has studied the nation’s behavior when it comes to the dollar, told Efe.

The researchers of the book “El dolar. Historia de una moneda argentina (1930-2019)” (The dollar. History of an Argentine currency,” carried out an in-depth revision of the circumstances that made the dollar “inseparable” from the South American country, where a plethora of songs, theater shows, books and movies have made reference to the currency since the start of the 20th century.

The roots of Argentina’s troublesome love story with the dollar began in 1931 when the government of Jose Felix Uriburu established the first exchange controls to counter the impact of the global crisis of the previous decade, when the export of meat and grains stopped being enough to maintain a functioning economy.

“The naturalization of the North American currency that we have today in the Argentine economy is a result of a very slow maturation process over many years,” said Luzzi. “In the heat of many crises layers built up that led the dollar to being so present in daily life.”

Financial comings and goings have led successive democratic and dictatorial governments to take measures that have not managed to maintain a strong local currency.

The most-remembered “plan” to stabilize the currency and placate the consequent price increase came in 1991, when the then-economy minister Domingo Cavallo brought in a law that equated the value of the peso with that of the dollar for a decade.

Inflation was under control but the bomb in this artificial system didn’t take long to go off. With the 2001 crisis, which limited cash withdrawals from the banks, the country shelved currency convertibility policies in favor of an independent peso that successive presidents attempted to clamp down on this through restrictions.

Amid fresh financial chaos mere days ago, President Mauricio Macro was forced to bring in measures to stave off the constant flight of capital.

Those who frequent Buenos Aires’ financial center have got it clear: “people are trying to protect themselves with a currency with which after the crisis they’ll have more buying power,” said Santiago.


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