
According to McDonald's Big Mac Index, created by The Economist, Argentina has the highest price for a Big Mac in all of Latin America ($7.37) and the second-highest in the world, only behind Switzerland. A year ago, the price in dollars was half of that.
This is a consequence of the revaluation of the Argentine peso today, which increased by 40% between December 2023 and October 2024, according to data from the Bank for International Settlements (BIS). However, this strengthening of the currency did not result in a real improvement in the purchasing power of Argentinians, as wages remained frozen and the reforms under President Javier Milei led to a recession that reduced consumption.
The "Super Peso"
Thiago, a Brazilian programmer, told me that although he moved to Argentina two years ago, taking advantage of the exchange rate, he is now considering returning to Brazil.
The fall of the Brazilian real against the dollar, combined with the strengthening of the Argentine peso, has made living in Argentina more expensive for those earning income in dollars.
The phenomenon causing this change is due to the policies implemented by President Javier Milei to reduce inflation, which reached 211% in 2023. One of the main strategies was the "inflation anchor," which established a fixed devaluation of the peso at 2% per month, much lower than the monthly inflation rate.
Public spending was also sharply reduced, and the issuance of money to finance the Treasury ceased.
As a result, Argentina's annual inflation closed 2024 at 118%, a 44.5% decrease from the previous year. However, the official dollar, being lagging behind the cost of living, has caused what many economists call "dollar inflation," with price increases exceeding 70% in U.S. dollars.
The "Blue Dollar" and Its Impact
On the other hand, the "blue dollar," the free exchange rate, has remained relatively stable compared to the official exchange rate, partly due to the success of the capital amnesty implemented by the government. This measure allowed millions of dollars to enter the financial system, reducing the gap between the two exchange rates.
Consequences of the "Strong Peso"
This "strong peso" has both positive and negative aspects for Argentina's economy. On the positive side, wages have increased in dollars. According to a report by Bumeran, the average salary in Argentina is now $1,234, surpassing the regional average. However, the strengthening of the currency has had adverse effects. The number of foreign tourists in Argentina fell by 19.2% in November, and Argentinians are taking advantage of the "stable dollar" to travel abroad.
The most concerning issue is the impact on sectors such as industry and agriculture, where production costs have risen, making them less competitive both locally and internationally. Additionally, the opening of imports has made foreign products more accessible, but this has increased the cost of domestic production.
The Future of the Argentine Peso
The question about the future of the exchange rate and the impact of continuing to be "expensive in dollars" remains open. In February 2025, Argentina’s Central Bank will reduce the peso’s monthly devaluation from 2% to 1%, which could further strengthen the local currency and continue reducing inflation.
However, the real challenge will come when Milei’s government decides to lift the capital controls and allow the peso to float freely, which could further alter the country’s economic balance. Only time will tell whether this policy will succeed in the long term or lead to new economic imbalances in Argentina.
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