In the past, tourists traveling to Argentina have received much better exchange rates by exchanging their dollars for pesos on the parallel market. Knowing this and intent on attracting more dollars for tourism in the country, the government allowed Mastercard and Visa to offer a much more favorable exchange rate for travelers. The intention is to promote the use of credit cards in Argentina.
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The solution is even more convenient and advantageous, as the largest banknote in the country is the 1,000 peso bill, which is worth around $3 for everyday purchases.
Using credit cards keeps more dollars in the formal economy, helping the country have foreign exchange reserves to stabilize the peso. Hence the government’s actions.
What are the changes for tourists with the rules for using a credit card in Argentina?
So far, the tourist credit cards used in the country used the official dollar exchange rate as the basis for calculation. As a result, foreign card transactions have dropped from $250 million a month in previous years to $30 million a month in 2022, according to Argentina’s central bank.
With the new rules, the Monetary Authority allows card issuers to use exchange rates similar to those used in the parallel market, currently around double the official rate.
The initiative has been in effect since November 3 and the country’s central bank says the Mastercard brand alone has already seen a 25% surge in transactions in its first week.
What is the exchange rate now?
Now, foreignissued cardholders can get 325 pesos per dollar, compared to the country’s official rate of 173 pesos, though each card issuer has to charge a commission of less than about 4%, central bank officials said.