Argentines carry wads of cash as peso devaluation amid high inflation

Argentine peso notes, devalued by years of rampant inflation, now at nearly 60%, are starting to put a literal strain on people’s wallets, with the largest banknote in circulation being worth less than US$5 (R$23) in the markets. commonly used exchange rate.

That means people have to carry huge wads of cash, a security problem and logistical headache for savers, businesses and banks.

The situation isolates Argentina in Latin America, except perhaps for Venezuela. The largest bills in Mexico and Peru are worth around US$50 (R$239), while in Brazil they are the equivalent of around US$40 (R$191). In Chile and Colombia they reach around US$ 25 (R$ 119) and, in Paraguay, they reach US$ 15 (R$ 71).

In Argentina, the thousand-peso note is technically worth US$8.40 (R$40) using the official exchange rate, but with tight capital controls limiting foreign currency purchases, most people use parallel markets. where the same amount yields $4.80.

Ten years ago, 1,000 pesos were worth US$ 200 (R$ 959). Until about two decades ago, the same amount would have given you a thousand dollars.

“I have to carry that huge wad of bills in my wallet, because it doesn’t fit in my pockets, and I’m afraid of being robbed,” said Laura, 40, a lawyer in the capital Buenos Aires.

“The thousand-peso note is no longer worth anything. The (monthly) rent on my house is just over 50 thousand pesos.”

The low value of the largest banknote available means that many companies in the cash-reliant economy are left with huge piles of bills at the end of the day. It is not uncommon for people to arrive to pay larger expenses with large chunks of cash.

“The denomination of the notes is very decoupled from the average transaction in the economy,” said Camilo Tiscornia, director of C&T Asesores Económicos, adding that this creates inefficiencies in the market. “You have to make ridiculous payments with a huge number of bills.