Argentines bought more than USD 3.4 billion and made a card for USD 1.2 billion

Argentines Ramp Up Dollar Spending by 41% in July – A Sign of Economic Shifts?

Buenos Aires – In a dramatic surge, Argentines spent a staggering USD 1.192 billion in US dollars during July, a 41% increase compared to the same period last year. This significant jump, revealed in newly detailed data from Argentina’s Central Bank (BCRA), points to a complex interplay of factors including a weakened peso, increased travel, and a growing appetite for international online shopping. This is breaking news with potential ripple effects throughout the Argentine economy.

Tourism and the Devalued Peso Fuel the Increase

July coincided with the peak of winter holidays for many Argentines, leading to a substantial increase in spending on international travel. The BCRA data breaks down spending into key categories, revealing USD 129 million on passenger transport and USD 124 million on tourist services abroad. However, the surge isn’t solely attributable to vacations. The Argentine peso underwent a significant devaluation in July, increasing by 14% after a period of relative stability. This made dollar-denominated purchases more expensive, incentivizing Argentines to spend their dollars – or acquire them – to mitigate the impact of inflation.

Shein, Temu, and the Rise of Online Shopping

Perhaps the most striking revelation from the BCRA’s new data breakdown is the growing influence of online retail giants like Shein and Temu. A substantial portion of the increased dollar spending – USD 94 million – was attributed to “goods dispatched through postal services,” largely driven by these e-commerce platforms. This highlights a shift in Argentine consumer behavior, with a growing preference for affordable goods sourced directly from international vendors. Digital services like Amazon, Google, and streaming platforms also accounted for USD 146 million in spending, demonstrating the continued reliance on foreign-based digital subscriptions.

Who’s Paying? Dollars from ‘Under the Mattress’

The BCRA reports that a remarkable 70% of these expenses paid by card are settled directly with customers’ own dollar holdings. This suggests a significant amount of “dollarization” within the Argentine economy, with individuals drawing on savings held in US currency – often referred to as funds “under the mattress” – to finance their purchases. The remaining 30% is likely funded by Argentines purchasing dollars specifically to cover their credit card bills, incurring a 30% tax surcharge. This makes holding existing dollars a far more attractive option.

Dollar Purchases Surge Alongside Spending

The demand for dollars extended beyond spending, with Argentines purchasing USD 3.408 billion in US dollars in July – a 42% increase from June’s USD 2.416 billion. This surge in demand was driven by 1.3 million individuals, a significant jump from the 1 million buyers in June. While the BCRA emphasizes that the 70% figure relating to spending doesn’t necessarily translate to increased demand in the exchange market, the sheer volume of dollar purchases paints a clear picture of economic anxiety and a desire to protect wealth from inflation. The non-financial private sector was a net buyer of USD 282 million in the exchange market, with individuals accounting for a massive USD 5.644 billion in net expenditures, primarily on dollar tickets and non-specific currency purchases.

Interestingly, the BCRA notes that a portion of these purchased dollars are deposited in Argentine bank accounts and subsequently used for foreign currency card transactions, suggesting that not all funds are flowing out of the country as permanent asset formation. This is a crucial nuance often overlooked in initial reporting.

The situation in Argentina remains fluid. Understanding these trends – the rise of online shopping, the impact of the devalued peso, and the extent of dollarization – is critical for anyone following Latin American economics. For investors and travelers, staying informed about these developments is paramount. Keep checking back with Archyde.com for the latest updates and in-depth analysis of the Argentine economic landscape.