official vs. black market fx

B

billyjoerob

Reading about the situation in Argentina, I read that the official rate is 4.225/dollar, but that the unoffical rate is more like 4.75.

So my question is, who trades in the black market? Who is excluded from trading their pesos for dollar at the official rate? Because it would make a ton of sense to buy dollars at the official rate (4.25) and then buy back pesos at the unofficial (4.75) rate.
 
Quote from billyjoerob:

Reading about the situation in Argentina, I read that the official rate is 4.225/dollar, but that the unoffical rate is more like 4.75.

So my question is, who trades in the black market? Who is excluded from trading their pesos for dollar at the official rate? Because it would make a ton of sense to buy dollars at the official rate (4.25) and then buy back pesos at the unofficial (4.75) rate.
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When I was in Russia (then Soviet Union) back in 1989, students like myself and other tourists were constantly approached on the street. The black market rate for Rubles-to-Dollars was much better there. I went along, happily playing a tiny part in destroying that wretched economy. I never saw a cop or anyone else trying to stop this, either. I think everyone knew things were about to change.

I assume things like this go on in other countries, but I doubt it's out in the open as much.
 
The strong currency is subsidizing some imports, so that domestic prices don't get too high. So for instance it's subsidizing foreign energy imports. An Argentine can buy oil for less using pesos on the street than she can on the international market using dollars. If I'm an oil retailer, I can exchange those pesos for oil at a subsidized rate. But I assume not all importers get the favorable rate. Do Argentines going on vacation in the US get the same favorable rate? How about Americans vacationing in Argentina and paying the official rate? I assume they get really hosed and hence have an incentive to exchange on the street.
 
It was a constant barrage in Czechoslovakia. For some reason they always asked in German even though I was wearing that large sign that all Americans seem to have.

"Haben sie taschengeld?"
 
''.......buy dollars at the official rate (4.25) and then buy back pesos at the unofficial (4.75) rate........"

sounds like peso pimping with a decent spread.

cheers,

s

:cool:
 
Quote from MKTrader:

When I was in Russia (then Soviet Union) back in 1989, students like myself and other tourists were constantly approached on the street. The black market rate for Rubles-to-Dollars was much better there. I went along, happily playing a tiny part in destroying that wretched economy. I never saw a cop or anyone else trying to stop this, either. I think everyone knew things were about to change.

I assume things like this go on in other countries, but I doubt it's out in the open as much.
More...

No one thought the soviet union woul ever collapse, but when it did no one was surprised.
 
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