Qatar and Coldplay: Argentina multiplies its exchange rates

The "dólar Catar" and "dólar Coldplay" were added to Argentina's exchange control jargon on Wednesday, as tax increases on the purchase of foreign currency for tourists' expenses abroad or concerts and international shows came into effect.

Restrictions on the purchase of foreign currency in Argentina date back almost 100 years and have been imposed intermittently. The most recent system was established in 2019, with an official rate that currently stands at 157 pesos per greenback.

But this still isn’t enough to contain the demand for dollars and, in the face of Central Bank shortages, a dozen exchange rates have popped up on the legal market aimed at sectors of the economy or specific transactions that require foreign currency.

Of all the nicknames that the greenback has been given in Argentina, the best known is the "dólar blue" which is traded on the parallel or illegal market. On Wednesday, it stood at 288 pesos to the dollar.

There are many different ‘dolár’ variants: "soja", "mayorista", "contado con liqui", "catar" or "coldplay" – a map of the participants in the exchange game.

Incoming

Faced with a crisis of international reserves and as a stimulus to agricultural exports, Argentina's main source of foreign exchange this year has been the government’s special seasonal scheme for the liquidation of the soybean harvest, which resulted in an exchange rate of 200 pesos to the dollar.

In effect for only 25 days in September for grain sales, it allowed more than US$7.6 billion to boost the Central Bank's coffers.

"The 'soy dollar' meant the best month of foreign exchange purchases for the Central Bank in the last 20 years," estimates economist Nery Persichini, of GMA Capital.

"The liquidation was so extraordinary that it allowed Argentina to meet its three main goals before the IMF in terms of international reserves, fiscal results and monetary assistance to the Treasury," the expert told AFP.

The IMF, with which Argentina has a credit agreement worth US$44.5 billion, approved the country’s second review last week, allowing the disbursement of US$3.8 billion to boost reserves even further.

The various rates are the government's attempt to avoid a jump in devaluation, with the country suffering from an inflation rate projected to exceed 90 percent this year.

"Not devaluing is a political decision. But any measure adopted is risky in this inflationary context. That is why the decisions are patches that try to amend previous patches," Persichini summarised.

Outgoing

Alluding to the upcoming World Cup, the new ‘dolár Qatar’ measure provides a new exchange rate for credit card expenses exceeding US$300 per month. It is calculated by charging three different levies on the official rate, of 30 percent, 45 percent and 25 percent. This Wednesday it was quoted at 314 pesos.

Its creation responds to a decision to "take care" of the dollars brought in by soybean sales, said Persichini.

According to official data, in the last two months the tourism sector has racked up a deficit of more than US$1.5 billion, and the government fears that the figure will grow because of trips to the World Cup taken by fans between November and December, and the upcoming southern summer season beginning in January.

"The aim is to discourage demand for foreign currency for tourism and card purchases, without affecting 'hormiga' [small or one-off] consumption, such as streaming services. The market probably reads this as another sign of the main economic policy of this government, which is not to devalue," Juan Pablo Albornoz, of the firm Invecq, told the La Nación newspaper.

In addition, there’s also the ‘dolár lujo’ for luxury items such as yachts, private jets or precious stones. It is worth the same as the "Qatar dollar."

The ‘dolár Coldplay’ refers to the rate for paying admission to international shows such as the upcoming run of nine concerts put on by the British band Coldplay at the Monumental stadium. It is calculated by adding a 30 percent tax to the official exchange rate, which on Wednesday meant about 204 pesos to the dollar.