Post: #1

Argentina has implemented strict currency controls on the purchase of foreign currency. The short backstory is they have huge bonds, the so-called Boden bonds, which they have guaranteed they will pay back in dollars on a yearly basis, and they are stretching terribly to make their payments both in August and December. Therefore, the central bank is not selling dollars to anyone w/in the country without proof of necessity; this has driven up the dollar price on the black market drastically, and created a tremendous arbitrage opportunity.

I've written about this briefly before, but the gap is only getting wider. Anyone who wants to come to Argentina now can take advantage of it w/o any serious paperwork; those who are based here, especially if you have peso-denominated bank accounts tied to a credit card which can be used abroad, stand to make bank.

A quick rundown of the various rates, updated constantly, is here:

http://dolarblue.net/

Cuevas, or black market exchange houses, are currently buying dollars at ~6, while the national bank is selling (if you can get approval to buy physical dollars) at ~4.54. That's a 30% markup, instantly. There are a few ways to take advantage of this.

Sending money to Argentina via money transfer (xoom.com) gives you that roughly 6:1 exchange rate. You can then purchase peso-denominated goods at a 30% discount.

You can buy plane tickets from travel agencies for yourself, or indeed anyone else at the dollar-price, converted to the peso price using the official exchange rate. If your cousin needs a flight from NY to London, you can get it for him at that massively discounted rate.

If you have a peso bank account w/ a credit card, things get significantly more interesting. You can buy things for anyone you know on amazon.com or what have you in dollars; your peso-denominated account will be charged at the official exchange rate.

The following I have not verified - but - using the Square payment system, you can send cash to yourself using your peso-denominated credit card from your Argentine bank account to your US bank account, if you're inside the US (or have a VPN connection) and have both a US and Argentine bank account. Imagine doing this with Visa Black/Amex Platinum card in high volume.

That's using the 6:1 "blue" dollar rate you get at exchange houses & using xoom. If you have both an Argentine and US brokerage account, you can purchase heavy volume-traded stocks on the NYSE, transfer them to your Argentine brokerage, and sell them in Buenos Aires. This method, referred to as a blue chip swap, will net you up to 6.7:1, a 47% premium on the official rate. This is currently the only easy method for companies based in Argentine to convert their profits to dollars in high-volume.

The currency controls may very well ease up after December, if the government manages their payments well and solves their energy-subsidy problem.

Post: #2

Wow. Excellent speculative tips. How much of this have you done?

Post: #3

I've been doing the transfers via xoom for a while, and am now initiating blue chip swaps. I don't have a peso-denominated bank account, so I haven't done any of the credit card side. I haven't bought airline tickets etc. for anyone else yet, but have confirmed it with agents. I haven't confirmed the square payments process, but if I can get an Argentine cc, I will start doing that. Argentine credit cards may be shut down for external use before I get through the process - the bank/credit system here is extremely inefficient.

(07-17-2012 06:06 PM)durangotang Wrote:  Wow. Excellent speculative tips. How much of this have you done?

Post: #4

Thanks Portofmanteau for the info,

I am thinking about (maybe) starting a business in Argentina.

Let's say you build a small company, how would you do to change your Argentina Pesos you earn with your business back to US Dollars using the official rate? I was thinking about invest the money in a local product, say wine, and then sell these products abroad to get USD.

Post: #5

How much money have you made doing this ?

Post: #6

(07-18-2012 04:24 AM)julio26 Wrote:  Let's say you build a small company, how would you do to change your Argentina Pesos you earn with your business back to US Dollars using the official rate? I was thinking about invest the money in a local product, say wine, and then sell these products abroad to get USD.

You'd do it using one of the methods I talked about above. If the amounts aren't large, it would make sense to get residency here, get an Argentine cc, and either transfer money to yourself using square, or buy things for people in the US etc. using your Argentine card and have them pay you.

Import/export is heavily regulated and very difficult to get started in. You're not going to be able to get the wine out without connections.

Large business here use blue chip swaps, so they're on the raped end of that 6.6-6.8 exchange. However, it's the most liquid, reliable & legal way to convert large volumes of pesos to dollars.

Post: #7

(07-18-2012 07:48 AM)Lumiere Wrote:  How much money have you made doing this ?

I'm not making money, I'm buying things at a discount. To make money you need a source to buy your pesos back and give you dollars directly. To do this you basically either need a peso-denominated credit card you can use internationally, or someone who will buy pesos back from you at an intermediary rate, e.g. tourists. The other big loop hole is flights, but right now I'm only comfortable arranging that in-family.

Post: #8

Edit

Post: #9

Very smart... I've been playing the spread too with airline tickets. I send dollars to my family friends in BSAS and they buy plane tickets at the government sanctioned rates. Great way to get 30% off your airfare.

Have some money laying around, but anything more than getting cheap flights seems too risky. If on the other hand they have another 2001 type of crisis, I'm booking a flight down there as soon as the riots stop.

Post: #10

If you have larger sums sitting around, you play the long-game in Argentina. I went into some detail in taxi investment in another thread, investing in other businesses there could be a good play, especially if you don't believe collapse is imminent. It's hard to say if/when that will happen, as I've been predicting it for years, the government has seemed to be hanging on by a thread since around 2009, 4 years later they're still hanging in there.

(08-20-2013 07:04 PM)booshala Wrote:  Very smart... I've been playing the spread too with airline tickets. I send dollars to my family friends in BSAS and they buy plane tickets at the government sanctioned rates. Great way to get 30% off your airfare.

Have some money laying around, but anything more than getting cheap flights seems too risky. If on the other hand they have another 2001 type of crisis, I'm booking a flight down there as soon as the riots stop.

Post: #11

(08-20-2013 07:04 PM)booshala Wrote:  Very smart... I've been playing the spread too with airline tickets. I send dollars to my family friends in BSAS and they buy plane tickets at the government sanctioned rates. Great way to get 30% off your airfare.

Have some money laying around, but anything more than getting cheap flights seems too risky. If on the other hand they have another 2001 type of crisis, I'm booking a flight down there as soon as the riots stop.

Ok. How do you do this actually? Please detail this out?

I have some friends in Arg that I could ask.. I think.

Post: #12

Crack down on arbitrage in Argentina.

Foreigners can no longer buy airplane tickets in pesos originating from Argentina, or any type of travel services.

http://www.iprofesional.com/notas/175788...-de-viajes

Post: #13

I still have an "arb" in Argentina (probably no different than anyone else). But, it is simple as bringing cash to a second hand clothing store that is a front for an FX shop (everywhere). I've done as well as 9.0 pesos/$ when the posted rate was 5.5 pesos/$.

But, I view this as less of an arbitrage and more that foreigners are penalized so you need to find an FX shop (i.e. arb) in order to be on equal footing with the locals. Hell, even taking the Ferry over to UY to get cash out of the machine is being policed these days because the spread between the posted rate and the black market rate is so wide. Basically, when I go to Argentina, if I don't do an FX trade whenever the opportunity presents itself I feel like I'm getting hosed on every purchase I make.

There is indeed a true arb to be had in Argentina. But, in my opinion requires a solid $XXmm to pull off and I couldn't get the balls to put it into action despite it being a clean play and devised by some of the best traders that I've ever dealt with.

Post: #14

The ones who wanted to see the peso completely devaluated compared to dollar must be cracking their heads to walls.
Yes, peso devaluated but not like those vultures wanted.
I believe you can still make some gain but those who bought illegal dollars at 12 or 13, not the official market dollar that is actually frozen at 8, and wanted to get a ripping profit, lost money.

Post: #15

I don't quite understand how the xoom piece works. Do you send money to someone you know there, or do you send it to an account you hold? As a foreigner, how do you open said acct in Argentina?

Post: #16

(03-09-2014 01:38 PM)TravellerJay Wrote:  The ones who wanted to see the peso completely devaluated compared to dollar must be cracking their heads to walls.
Yes, peso devaluated but not like those vultures wanted.
I believe you can still make some gain but those who bought illegal dollars at 12 or 13, not the official market dollar that is actually frozen at 8, and wanted to get a ripping profit, lost money.

The peso will continue to devaluate. Devaluation is currently on pause now due to the current influx of dollars from the soy harvest, but the underlying structural problems and specifically the energy deficit will not be solved until vaca muerta is developed. You'll see 12-13 again very soon.

Post: #17

portofmanteau is on spot about the whole mess. Things look for the worse than for the better, specially in a lame duck second presidental term.

Post: #18

Could you:

1. Fly to BSAS with $10,000 USD (leave US with 10K, and enter Arg carrying 10K without raising any customs/TSA eyebrows)

2. Exchange on the "blue market" for 9/USD or 90,000 ARS

3. Fly back to US (leave Arg with 90K pesos, and enter US also without raising any customs/TSA eyebrows)

4. Exchange for $12,825 USD (rate at Wells Fargo as of right now)

?

Post: #19

No one in the US (that I know of) will exchange pesos back into dollars because of the volatility. Now that they're not allowing plane tickets, I can't really think of anything that's small enough to buy there in blue market dollars and bring back to the US that won't set customs off.

Post: #20

(03-09-2014 04:10 PM)portofmanteau Wrote:  

(03-09-2014 01:38 PM)TravellerJay Wrote:  The ones who wanted to see the peso completely devaluated compared to dollar must be cracking their heads to walls.
Yes, peso devaluated but not like those vultures wanted.
I believe you can still make some gain but those who bought illegal dollars at 12 or 13, not the official market dollar that is actually frozen at 8, and wanted to get a ripping profit, lost money.

The peso will continue to devaluate. Devaluation is currently on pause now due to the current influx of dollars from the soy harvest, but the underlying structural problems and specifically the energy deficit will not be solved until vaca muerta is developed. You'll see 12-13 again very soon.

I dont think we will see it. It seems as if you are desperate to see it happening portofmanteau. 12 13 is the blue illegal market, is not the official one.

government coped with financial attacks of people who want nothing but to profit from despair, lack of employment, etc

Post: #21

(03-10-2014 03:06 AM)booshala Wrote:  No one in the US (that I know of) will exchange pesos back into dollars because of the volatility. Now that they're not allowing plane tickets, I can't really think of anything that's small enough to buy there in blue market dollars and bring back to the US that won't set customs off.

Wells Fargo has a currency exchange rate here.

https://www.foreignexchangeservices.com/...dCostLabel

Is this a theoretical rate only, where they will not actually do the exchange because of the volatility?

Post: #22

(03-10-2014 04:07 PM)Sugar Wrote:  

(03-10-2014 03:06 AM)booshala Wrote:  No one in the US (that I know of) will exchange pesos back into dollars because of the volatility. Now that they're not allowing plane tickets, I can't really think of anything that's small enough to buy there in blue market dollars and bring back to the US that won't set customs off.

Wells Fargo has a currency exchange rate here.

https://www.foreignexchangeservices.com/...dCostLabel

Is this a theoretical rate only, where they will not actually do the exchange because of the volatility?

Theoretical rate. No one takes pesos at those rates, checked 5/2013 and 10/2013, although you're welcome to try yourself.

Post: #23

(03-10-2014 10:41 AM)TravellerJay Wrote:  I dont think we will see it. It seems as if you are desperate to see it happening portofmanteau. 12 13 is the blue illegal market, is not the official one.

government coped with financial attacks of people who want nothing but to profit from despair, lack of employment, etc

I'll pay you 9 pesos per dollar and buy all the dollars you have. Easy 20% profit over the official rate (7.825).

Something tells me you aren't going to take me up on this generous offer.