Buenos Aires, Argentina – November 21, 2023
On the bustling streets of downtown Buenos Aires, a small group of black market money traders, colloquially known as “arbolitos” or little trees, vociferously sought business on Monday. This scene unfolded a day after the election victory of Javier Milei, a libertarian outsider who advocates for dollarizing the economy, sending ripples of uncertainty through the black market currency trade.
The illicit trade in dollars has long been prevalent in Argentina, where a majority of the population harbors little faith in the beleaguered local peso, grappling with triple-digit inflation and rapid depreciation.
The election outcome has thrust the underground market into the spotlight, especially given the strict capital controls on official currency trading that limit formal access to dollars. This has resulted in the emergence of parallel rates, with dollars trading at a substantial premium—over 900 pesos per greenback compared to the official rate of 350 pesos.
While Monday’s streets were quieter than usual due to a local bank holiday and the lingering shock of the election results, some “little trees” continued their trade, selling dollars at rates ranging from 920 to 950 pesos per dollar, reminiscent of last Friday’s levels.
Marcelo, a vendor who preferred to go by his first name only, revealed that his associates were selling dollars at 920, down from the 950 they charged on Friday. He attributed this adjustment to signs of the peso gaining value in crypto markets, the only ones currently in operation. Marcelo expressed optimism, predicting further peso strengthening on Tuesday, envisioning the currency reaching 870 or 860 per dollar, a forecast that contrasts with the prevailing expectation of Milei’s win putting pressure on the peso.
Another vendor, Nicolas, a few blocks away, held a different view, estimating that the peso would remain stable until Milei assumed power in December. However, uncertainty looms as the markets reopen, with the peso having experienced a rapid slide across all markets this year, and further devaluation anticipated in the coming weeks, following a sharp adjustment in August.
For many traders, the uncertainty is coupled with a glimmer of hope that Milei’s ambitious plans, including dollarizing Argentina’s economy and closing the central bank, could bring more financial stability to a nation where poverty rates have surpassed 40% this year.
“I want to have dollars,” confessed Milka Car, a 24-year-old university student who doubles as a money changer in Buenos Aires. She expressed her dependence on handouts from tourists, emphasizing the challenging circumstances faced by many young people lacking opportunities. Despite acknowledging concerns about Milei’s proposed cuts to public education, Car, who voted for Milei, celebrated his victory, hoping it would lead to better salaries and opportunities.
As the “arbolitos” navigate the changing landscape of Argentina’s currency market, the coming weeks will undoubtedly unfold with a mix of anticipation, apprehension, and hope for a more stable economic future under Milei’s leadership.