Sara de Ferrere, a Uruguayan housewife, has been going abroad to do her shopping, taking the bridge over the Uruguay River to find cheaper prices in Concordia, Argentina, than can be found in her hometown of Salto.
“Everything’s half price,” she said, and what’s more, Argentine shopkeepers “ask you please to pay with dollars, so in addition to the exchange (rate), they give you a reduction on the price.”
So many of de Ferrere’s neighbors were joining her that gasoline sales fell “between 20 and 40 percent” on the Uruguayan side, said the local chamber of commerce secretary, Miguel Feris. Uruguay responded with a “Zero Kilos” program, barring its citizens from bringing back Argentine goods if they’ve been gone for less than a day. Since then, lines of cars at the border have disappeared, and gas sales have stabilized.
“They don’t let you bring absolutely anything,” de Ferrere said. “I went to Concordia and bought clothing that I wore and two or three other little things in my purse. But if they see you with a bag or packages, they take it from you.”
Even so, Argentina-bought clothes and cosmetics can be found in the street fairs of Salto, brought in by small-scale smugglers working across the porous border.
The situation is much the same in Paraguay, where people joke that their currency, the guarani, has so many zeros that everyone is a millionaire. Taking advantage of the guarani’s newfound strength, Paraguayans were rolling by the thousands into the Argentine frontier city of Clorinda to do their shopping.
Paraguay’s government increased customs inspections after receiving complaints from the country’s Industrial Union business chamber, but the flow isn’t just one way.
Argentines denied legal dollars back home often cross the border to buy dollars at a better-than-blue rate, and then benefit from the difference. That has offered a profit opportunity for Argentines who can buy dollars for 8.3 pesos in the Paraguayan city of Encarnacion and then sell them for 7 percent more at home. And as the “blue dollar” soared to 10 pesos, Argentines carrying bank cards took the ferry to Uruguay just to pull money from cash machines, waiting for hours in lines for dollars they could trade back home.
Argentina responded by limiting withdrawals using debit and credit cards by its citizens to $50 a month in neighboring countries, but that doesn’t stop the cash flowing outside the banking system.
All these distortions pose a threat to the dollar reserves of Argentina’s neighbors. Paraguay’s Economy Minister, Manuel Ferreira Brusquetti, estimated that some $200 million had left Paraguay for Argentina in May alone.
“We are present at the beginning of the end of the Argentine model, which is not sustainable any more,” he said, “and so (Argentina) is taking measures that oblige Argentines to buy dollars in our country and generate a flight” of currency.
AP writers Pedro Servin in Asuncion, Paraguay; Pablo Fernandez in Montevideo, Uruguay; Marianela Jarroud in Sanitago, Chile; and Lucas Bertellotti and Paul Byrne in Buenos Aires, Argentina, contributed to this report.