The All-Mighty Dollar

Ecuador

Earlier this year I went to Croatia, which is part of the EU but doesn’t use the Euro, and Montenegro, which is not part of the EU but does use the Euro. Slightly annoying. Not the Euro part – I don’t mind if I have leftover Euros because I’ll use them eventually. But having to get kuna for two days in Croatia irked me.

So, what a lovely surprise to find that Ecuador uses the US dollar. I went to my bank in New York before leaving the country and took out some cash in ones, fives, tens, and twenties. I still needed to take cash out later in Ecuador, and it’s a good thing I brought both my ATM cards. My Keybank one wouldn’t work in Ecuador. It’s the one I normally use while traveling – I’ve used it to withdraw cash in Costa Rica, Jamaica, Ireland, and even China with no problem. But I tried several banks in Ecuador and it just wouldn’t work.

Ecuador does mint its own coins as well, so you generally have a mix of their coins and ours in your wallet. It’s just like growing up on the Canadian border where we used Canadian and American coins interchangeably, until the Canadian dollar plummeted in comparison to ours. So aside from those Ecuadorian coins, if I had left over money, just like with the Euro, it was no big deal because I could use the money later, like in Panama (where I’ll be heading in April) which apparently also uses the US dollar.

What I didn’t want to bring home, only because they are heavy, is all those Sacagawea dollar coins that our government tried to get into circulation years ago. They all seem to have ended up in Ecuador, along with all our 50 cent pieces. I think Americans were just being obstinate and dumb when they rejected those, just like how we collectively freaked out about eliminating pennies and rounding all transactions up or down (which places in Quito, but not Cuenca, do). But those dollar coins do many more sense in countries like this where everything is cheaper and transactions involve smaller denominations.

Well, not everything is cheaper. Raw food stuffs, entertainment, transportation, most restaurants and bakeries, entertainment, sure. But a lot of things are comparable or even more expensive.

For example, I thought I might get a cheap off-brand smart phone here that I could pop a SIM card into to have a local number. Nope, that’s not a thing. Cheap smart phones don’t exist. So I went phoneless when I wasn’t at home with my iPhone on WiFi. Civilization doesn’t appear to have collapsed as a result. I had to buy contact lens solution and it was $12, when I can often get it on sale 2 bottles for $8 in the United States. I also needed to buy trail running shoes because I’m an idiot who left mine in Buffalo. I searched high and low for a pair and finally got some for $102 at the Adidas store. Yes, I realize there are plenty of trail running shoes at home that cost at least that much, but I already had my next pair picked out on Amazon for $60. I also couldn’t find a pair in Quito I really loved, which makes the cost sting more.

I did pay what felt like a really high $4 for a slice of (really delicious) quiche at a gourmet food place in the same mall where the Adidas store was. And in the SuperMaxi grocery store, prepackaged food items were basically the same price as they are in the United States.

But in Quito, I also lived downtown in a nice neighborhood. The lunch plates in my neighborhood ran $3-$5, while in less fancy areas, they were more in the $1.25 – $1.75 range. I passed by bodegas with huge barrels of rice and quinoa and beans whose prices were half what they were in my grocery store. Cuenca, not being the capital city, was cheaper as well.

Though there are plenty of wealthy people in Quito, make no mistake, it’s a poor country, with an average monthly salary of under $500. But I don’t feel as if I got scammed on prices. Most packaged items had prices written on them, and when I bought raw foods at the local bodega, the bill was so low that I couldn’t be getting ripped off. As for anything else, I’ve reached a point in my life where if the taxi driver is going to charge me $4 when he would charge a local $2, I don’t care. I make in one year what it takes him probably 25 years to make. The younger me would have bristled at the injustice of not being given the same price as everyone else, but the older me bristles at the injustice of the entire world and would never get upset over paying twice what the locals do while I’m down here with my good job living the good life.

Argentina

Money in Argentina is something else entirely. I knew things were going to be weird when people on the Buenos Aires Digital Nomads group on Facebook were talking about where to exchange money on the “blue market” and why you should understand cryptocurrency to live there. As soon as I arrived, people started talking to me about money. Both my taxi driver and the AirBnB host told me not to exchange money at a bank. My host “had a guy” who could come to the house, and she also recommended a store around the corner for exchange. You can take an AirBnB experience tour and learn all about it. At my first coworking session everyone (it’s a rotating mix of people from about a dozen countries) talked about money half the time: why they don’t have savings accounts, why they do transactions in cash, and especially about Bitcoin.

So why is money such such an all-pervasive topic here? Because the economy is a nightmare. Inflation has been insane for decades with one economic crisis after the next, and then COVID. A look at the XE chart shows that five years ago the official exchange rate was 15 pesos to the dollar. Now it’s 105. You need seven times more pesos to buy a dollar. See how unstable that is and how worthless the peso is? Over the same five-year period, the value of the dollar to Euro has only been devalued from $1.20 to $1.14, and the dollar to the pound from $1.37 to $1.35. Life is a lot easier when your money is consistently worth what it’s worth (ignoring inflation). Mortgages basically don’t exist in Argentina right now because as soon as you sign, the peso value of the mortgage would be less than the value of the property.

Then there’s the blue market exchange rate, how many pesos you can get to the dollar from a money changer on the street. When I changed money on my first day, I got 199 pesos to the dollar. On my second, I got 203, almost twice the rate I’d get in a bank. I’ve been told only to change a little bit at a time because the value changes so often. But either way, both of those unofficial values are way more than the official rate, which makes life here for me (someone who is able to bring in US dollars) very cheap.

I had quite the interesting conversation with an Argentine woman one day at the co-working space. COVID, while obviously devasting financially for most people, has had the one large benefit of turning a lot of work fully remote. For educated, skilled, and multilingual Porteños (residents of Buenos Aires), there’s a lot of new opportunities with foreign companies, and the money is guaranteed to be better than what they will make working for an Argentine company. The average and median salary in Buenos Aires is around $500 per month, with even software engineers making only around $10,000 per year. If they find remote work for a European or North American company, most likely the company will ask them for an official Argentine invoice for payment and require a bank account for direct deposit. This means that the Argentine government taxes that salary in full and their salary gets exchanged to pesos at the official exchange rate. Then, if they want to change their money back to dollars for big ticket items, they have to do it on the blue market for (currently) around 220 pesos to the dollar because the government limits how much residents can buy in dollars. Essentially, almost their entire salary vanishes into the financial miasma.

So, back to the woman at coworking. In her case, while she has a fully adult and professional job, she is essentially paid under the table by a company in Vietnam, which she got hired into during COVID. The salary is less than what she was offered by a German company, but she ends up with more than twice as much money in pesos because she gets paid in US dollars, not through a bank account, and the Argentine government never knows about and, therefore, doesn’t get taxed. And everyone here has their way of extracting dollars from overseas accounts and transfers (also all an open secret, just like the blue market), and then they all go exchange it on the blue market for twice the pesos. Basically, anyone playing by the rules is a total fool.

The store I change money at is a legit business for lottery and mail. The money exchange part of it is an open secret. It’s not advertised, but everyone knows it’s there. Both times I’ve gone so far, there was a line. Obviously no one is taking your name or ID number during the transaction. If you walk down the major shopping avenues in Retiro neighborhood, like Florida, there will be someone hawking cambio (exchange) outside every store, but I like my place because I don’t have to worry about counterfeit bills.

What else to expect about the weird money situation here?

• You will see signs letting you know that shops can’t short change you. If you’ve travelled in Latin America, you know that correct change is a perpetual problem. In Argentina, if something costs 110 pesos and you only have 100 peso bills and the shop doesn’t have change to give you 90 pesos back, they can only charge you the 100. The difference has to be in your favor. I saw signs posted on cash registers stating that all over the place and it happened to me a few times.
• You can use US dollars (and sometimes Euro or Brazilian reals in certain places), but you won’t get a good exchange rate that way.
• You’ll get asked some places (like the grocery store) if you’re the “consumidor final,” which, if I understand correctly, they are asking if you’re buying the products for yourself or if they are intended for resale or use in a business, like a restaurant.
• They have a great service called Rapipago which you can use to make online purchases without a credit card. You “buy” the item online and you are emailed a Rapipago code. Then you go to a store that has a Rapipago representative, make the payment there, and they get the money to the vendor. As the consumer, you don’t pay for this service. It’s a good way to get to shop online here and still pay half price in cash.
• As with Ecuador, some things are bizarrely expensive. In the US, I can buy 150 soft dental picks on Amazon for $8 while here a pack of only 15 cost me $1.40 blue. And no, I wasn’t in an expensive store. That was in a very cheap “we have everything” dollar store equivalent. (By the way, I highly recommend soft picks over floss if you have large gaps between your teeth. Way more effective.)

After two months in Ecuador, my brain was already in cash mode, but I don’t have enough dollars to last my entire time here, and ATMs that work with foreign cards can have a withdrawal limit as low as $50 with a transaction fee as high as $15! Plus some items, like plane tickets, I have to use a card for. So, despite the exchange rate disadvantage, I’ve been using my card a sometimes. Some things about credit cards in Argentina:

• Almost every place in Buenos Aires and other large or touristy areas takes credit cards but some places try to refuse to let you pay that way. It’s common to see legal signage at the cash register to the effect of “you have the right to pay with a credit card here and if the cashier won’t let you, you should report the business to the government.”
• If a place truly doesn’t take plastic, they make sure to tell you that as soon as you walk in.
• You can often get a discount if you pay in cash. Some businesses have signs posted saying there’s a 10 or 20 percent discount on everything with cash. This is because they don’t have to report the revenue (and get taxed) that way. Cashiers will ask you in advance how you plan to pay and the price is calculated differently if you pay with a card.
• If you pay with a credit card, you have to show your ID, without exception.
• I did get rejected from using my card a few times because I didn’t have an Argentine national ID or my passport on me, only my Colorado ID. It’s not that they didn’t trust it was me. The problem is that they are required to input the ID number in their system to accept the card and some systems can’t take the number of digits in a Colorado driver’s license as evidence that I’m a foreigner with a tax exemption. On the flip side, I had to use my credit and wasn’t allowed to use cash with the ride-sharing service Cabify because I don’t have an Argentine ID to enter into the app to verify my identify. A foreign passport is not allowed for that.

It’s a little painful any time I pay with a card, knowing that if I used cash, the purchase would be half price. For example, last Sunday morning I went to a really nice French bakery in my neighborhood and got three croissants (Yes, all three just for me. Don’t judge – I’m running a lot, training for Patagonia) and a medium coffee. It was 860 pesos, or $8.50 USD officially. That’s quite cheap already since the equivalent in Boulder would cost around $20 after tax and tip. But I paid with cash exchanged on the blue market, so it actually cost me only $4.25. Nothing in a world class city should be that cheap.

But for Argentines who don’t have access to dollars (and don’t have American salaries), living here is not cheap. Though tipping is not the norm here, you can make a tour guide’s day with a ten dollar tip (which is only $5 for you on the blue exchange rate). The 5-10 percent guideline for taxis and restaurants is often less than $1 Blue, so why not give even just an extra dollar? I’ve had the Rappi food delivery people be really surprised by a $3 tip. And when you buy a beautiful handicraft that only costs you $3 Blue, when it would cost $6 on the official exchange rate, consider giving the vendor a little extra since they don’t have the advantage you do. It’s a bizarre thing realizing that I could just hop on a plane and get out of here if inflation causes panic runs on the grocery stores again, but all the people who make my life here good can’t do that. They live under a lot of uncertainty for their financial future. If you come visit, be generous.