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The Argentine Peso Crisis: How Businesses are Turning to the Dollar

Argentina’s peso is teetering. As one of the globe’s most underperforming currencies, it’s lost a staggering 20% against the US dollar in just one month and a jaw-dropping 90% over five years. From some perspective, this once-respected currency now trades at less than a third of a penny at official rates and a mere tenth of a penny at informal rates.

In light of this, businesses in Argentina have taken a unique turn. Instead of waiting for national policy solutions, they’re self-preserving by increasingly embracing the US dollar.

It’s not just a few businesses either. Data reveals that roughly 200,000 tech-sector pros in Argentina now receive their paychecks in dollars or euros. This move towards foreign currencies might be attributed to the alarming turnover rates (hovering over 30%) experienced by peso-based roles. A few prominent names that have incorporated this change include the likes of MercadoLibre, Accenture, Globant, and fintech frontrunner Ualá. That list is expanding, with Despagar, Beltarix, and VTEX joining the “pay-in-dollars” bandwagon.

But it doesn’t stop at salaries. The private sector is now looking at the dollar for regular business transactions. For instance, GoDaddy, a US-based website firm, no longer accepts payments in Argentinian pesos; they’ve switched to the dollar. Taking a stroll in Buenos Aires might surprise you: over 60% of apartment listings there now flaunt dollar prices, a substantial leap from just 20% a couple of years ago. Even some dining spots in the city are showing dish prices in dollars!

This trend, however, doesn’t come without its critics. While many laud the dollar’s stability, economist Robin Brooks is skeptical. He believes Argentina’s salvation lies in drastic measures like spending cuts and a recession, not in leaning on another country’s currency. Brooks also warns about the risks of relying too heavily on the dollar and proposes a possible solution: pegging the Argentine currency to Brazil’s real.

Whether that’s the future remains to be seen. For now, it’s clear that, as the peso continues to dwindle, businesses are crafting their own solutions to stay afloat. It’s a story of resilience, adaptation, and, yes, a lot of greenbacks!

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