Buenos Aires, Argentina – Lorenza Romero’s stationery on Monroe Avenue is painted red on the outside, with a wide window and a glass-fronted counter filled with banknotes from around the world. It is his son’s collection, and all but one currency is no longer in circulation – the United States dollar bill.
“He’s the one that drives people crazy here,” she said. “Their own currency doesn’t matter to them.
The observation of the 72-year-old grandmother reveals what is a raw nerve for many Argentines. The country’s official and sovereign currency is the peso – people earn and spend with it – but it’s the US dollar that defines value here.
The peso-dollar exchange rate is quoted daily by the media, alongside weather and traffic reports. Ask anyone, in any industry and any layer of society in Argentina, and they can probably tell you how many pesos it takes to buy a dollar on any given day (around 56 at last count) .
The greenback’s dominating influence has grown even more prominent this year, thanks to a crushing economic crisis that has seen the value of the peso collapse ahead of next month’s presidential election.
“Our brains are completely dollarized”
The dollar has a formal role in the economy. It is the currency in which real estate transactions are made, some debts are carried, and savings, if possible, are accumulated.
But it’s also sewn into the culture, like the punchline of jokes, the theme of memes, the silent protagonist of the movies. And it has become a shortcut for a changing economic landscape, from what to expect in the grocery store aisle, to who will become president.
“Our brains are completely dollarized,” Alejandra Covello, president of Covello Propiedades, a Buenos Aires-based real estate developer, told Al Jazeera.
The push and pull of this dual-currency system shifted into high gear in the weeks following the August 11 presidential primaries, which served as a litmus test for the October 27 general election.
President Mauricio Macri, whose neoliberal program cut subsidies and opened up the market, was beaten at the polls, losing to the main opposition ticket of Alberto Fernandez and former President Cristina Fernandez de Kirchner by 15 points.
The political rout sparked an economic crisis, with the peso losing more than 25% of its value in the days following the primaries. Screaming headlines followed the “flight” of the US currency out of the country, as if it was a person fleeing for his life.
“The dollar is in the DNA of Argentines”
The title of a new book by Argentine sociologists Mariana Luzzi and Ariel Wilkis sums up how and for how long the dollar has weighed on Argentina: The dollar: history of an Argentinian currency (1930–2019).
The book highlights a turning point at the end of 1958, following the coup d’état that overthrew Juan Domingo Peron. Then-president Arturo Frondizi implemented a so-called “stabilization plan” that freed up the market and included Argentina’s first deal with the International Monetary Fund (IMF). The plan sent the peso into free fall. The government announced a public holiday for the Argentine foreign exchange market, which means that no currency could be exchanged for 12 days. When operations resumed in January 1959, the masses rushed to the exchange offices on San Martin Street in Buenos Aires, demanding information on the value of the currency that would bring them fortune or famine.
“This is an important step for us because it signals when the dollar has become this object of attention,” Mariana Luzzi told Al Jazeera.
The dollar news has gone from technical and posed to vital and vibrant, with daily photos and stories that have created a new way of telling the economy in Argentina.
The dollar became the lens through which people learned to assess what was going on around them, says Luzzi. Analogies like “the price of beef loin is in the clouds – it costs as much as the dollar” helped cement this understanding, Luzzi adds, so that when the economy deteriorated and the hyperinflation took hold in the 1970s as families turned to the greenback. to protect their savings.
This pattern persists to this day.
When Macri announced at the end of August that the country needed more time to repay its debts, then imposed capital controls to help calm the markets, there was an increase in the number of people who went to buy and withdraw. their dollars from the banks, fearing a repeat of the 2001 “corralito” in which US funds were frozen, and many lost.
Luzzi says this idea of the dollar as a “safe haven” is one that has been cultivated over the years. “It’s like when people say, well, the dollar is in the DNA of Argentines,” she says. “It’s a repeating phrase.”
“The dollar is like a poison”
What is clear is that the history of the dollar in Argentina is closely linked to that of inflation. Its value affects the cost of imported goods, but it also affects domestically produced products that use raw materials that Argentina sells in the international market, as their price is in dollars. So the price of a carton of milk can skyrocket because local farmers feed the cows local grain which they buy in dollars.
The power of speculation is also at play. Economist Gabriel Rubinstein, of Buenos Aires-based Gabriel Rubinstein & Associados, says dollar fluctuations are technically only a fraction of the rise in peso prices. The rest, he says, is speculative – producers raise prices just in case.
“It’s not just about trying to gain the advantage; it’s more of a self-preservation instinct, ”he told Al Jazeera, adding that it produces a chain reaction that ends up hurting consumers.
“The daily gymnastics we practice in Argentina is not the same as in a country with low inflation,” he adds.
All of this translates into one thing for Daniel Estudillo, owner of a newsstand on Avenida de Mayo, in the heart of Buenos Aires.
“The dollar is like poison,” the 65-year-old told Al Jazeera. “Because the dollar goes up, and all commodities go up. “
Romero, the owner of the Monroe Avenue store, sees the same thing. As the dollar rose and people’s purchasing power declined, she had to drain her savings to keep her business afloat.
“I think if you’re here you have to use this country’s currency,” she said, leaning over the counter with the dollar bill. “Everything is peso. The workers earn in pesos. They don’t have enough to survive. How are they going to buy dollars?
The idea of making the dollar the official currency of Argentina – as have other Latin American countries – is regularly discussed, most recently this month in the Wall Street Journal.
In the 1990s, the peso was pegged to the dollar by the government of then-President Carlos Menem in an attempt to stifle inflation. It was far from painless. The pegging of the dollar weakened exports, forcing the government to take on more debt to keep it afloat as the economic crisis deepened.
In 2001, fearing a rush on the banks, the government of former President Fernando de la Rua imposed the famous “corralito”. The resulting outrage forced de la Rua’s resignation.
The dollar resumed a central role in 2011, when current vice presidential candidate and former president Cristina Fernandez de Kirchner decreed strict controls on the purchase of greenbacks. The controls were only lifted when Macri took office in 2015.
“We cannot consider him as a [bi-monetary] system that we choose. We have to see it as a happening reality, ”said Rubinstein, former representative of the Central Bank of Argentina.
For Carlos Eduardo Gonzalez, 28 and a recent migrant from Venezuela, saving dollars is common sense. He has been doing this since 2015, first as a hedge against the fall of his own country’s currency, and now as the owner of a store selling Venezuelan goods in the Belgrano neighborhood of Buenos Aires.
“You can tell people don’t trust the peso anymore,” he told Al Jazeera.
Simone Tejada, a thirty-year-old father who sells souvenir pins outside the presidential palace Casa Rosada, does not consider one currency to be more important than the other. But the value of both weighs on him constantly, as he wonders how he is going to afford to buy milk and bread for his young daughter.
“The dollar is everyday for us because it affects us every minute, in everything,” he says. “If I could save dollars, I would. “