Argentinian policymakers showed their creativity once again today by launching a new series of special-purpose exchange rates to try to halt the run against its Central Bank foreign currency reserves.
This time, Argentina’s fragile macroeconomy was put on edge by tourists leaving the country (many of them to the football World Cup in Qatar) and international musicians playing concerts in Buenos Aires, namely British pop rock band Coldplay.
The currency conversions needed for those types of transactions were carried out at a much cheaper rate than the free-market USD value of the Argentine Peso, creating a de facto subsidy that favored those activities at the expense of the country’s coffers.
In response, the government announced that the wiring of dividends from international concerts will have a 30-percent surcharge on top of the current ARS 150 : USD 1 official exchange rate, taking it to roughly ARS 200 : USD 1.
The Argentinian press jokingly dubbed this new exchange rate the “Coldplay Dollar,” after the band sold out the Monumental de Núñez stadium in Buenos Aires for ten concerts this month, part of a massive wave of foreign artists coming to Argentina to take advantage of cheap conversion rates.
The new rate remains significantly below the free-market peso, currently trading at close to ARS 300: USD 1, meaning that the inflow of foreign concerns in Buenos Aires is likely to continue, even if at a somewhat reduced cost for the country’s coffers.
Argentinian tourists traveling abroad, meanwhile, already face surcharges on their credit card purchases. But new levies will be imposed on those spending more than USD 300 per month, in what the Argentinian press has called the “Qatar Dollar,” after the host nation of next month’s World Cup.
Imported luxury goods will also face new taxes, leading to the creation of the “Luxury Dollar,” the third and final exchange rate to which Argentina gave birth today.