Argentina currency crisis is no jokeMarch 17, 2014: 6:00 AM ET
Back in January, the Argentinean peso was plunging after its latest devaluation by the government. I was assigned to write a story about it.
The end result -- besides 550 words on why Argentina was spooking foreign exchange investors -- was the inspiration for my spring break vacation: a week-long trip with my girlfriend to Buenos Aires and Uruguay. After all, it's been a brutal winter here in New York.
I suppose I was channeling the 18th century nobleman Baron Rothschild, who during the Battle of Waterloo famously said "the time to buy is when there's blood in the streets."
Of course, I wasn't expecting things to be that dire. My thinking was simple: a weaker peso meant cheaper steak and Malbec wine.
But in addition to enjoying a fascinating and vibrant culture, I witnessed what it's like to be in a country gripped by a currency crisis.
The U.S. dollar is still almighty
What struck me immediately was the role that physical money plays in the everyday lives of Buenos Aires residents, or Porteños. Watch out for fake bills and if possible, pay in exact change, people told us.
Two different exchange rates complicated the matter further. The official rate, which the government sets at around eight pesos to the dollar, exists alongside the black market rate of roughly 11 pesos per dollar.
We had been warned by a friend about this beforehand. Bring cash, buy pesos at the unofficial rate (also known as the blue rate), or lose around 35% of your spending power, he said. We obliged, and brought a lot more greenbacks than I would normally be comfortable carrying on an international trip.
Still, buying on the black market? That sounds sketchy. Can we get scammed? Arrested? Worse?
But as I soon learned, the so-called black market is far from underground. In fact, both the official and unofficial rates are published in the local newspapers daily.
The unofficial exchanges are everywhere, easily spotted by men shouting, "cambio, cambio!" (The word for "change" in Spanish.) Some exchange services even deliver pesos to hotels to make it easier for tourists.
The transaction is mutually beneficial. Visitors get more pesos, and Argentinians are protected from further currency destabilization by holding dollars.
"Everyone in Argentina is an economist," said a local resident I met, adding that his country experiences an economic crash every decade or so. Are Argentineans expecting another one? Absolutely, he said.
The sources of Argentina's economic troubles are well-known: sky-high inflation, dwindling foreign currency reserves, and softening exports due to a global commodities slump.
It's easy to fall in love with Argentina. The people are warm, the empanadas are delicious, and the architecture is stunning.
Still, the currency crisis is real and there's a sense that hard times are ahead. But Argentinians are passionate, smart, and resilient. In short, they've been through this before. They will hopefully bounce back again.