To understand the currency crisis that shakes the Argentine economy and threatens to sink the government of President Javier Milei, just cross the Andes and go down to the Chilean capital, Santiago. There you will see scenes like Carolyn Perez witnessed another day in front of the Courtyard by Marriott Hotel.
There were two Argentine couples, Perez recalls, hotel security, and they were carrying all those bulky items they had just bought in the car to return to Argentina. First, they stuck a TV; then another TV; then a large refrigerator; And then they squeezed in the car, one by one, and departed as Perez watched, stunned.
“It was shocking,” he says.
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And for the Milei government, deeply problematic. Each month, hundreds of thousands of Argentines, as well as these two couples, make shopping abroad, which is exhausting the reserves in heavy currency that Milei needs so much to defend the weight while he is under attack. They travel to Rio de Janeiro, Miami and the Uruguayan coastal city of Punta del Este, but when it comes to shopping trips, most come to Santiago.
Throughout a popular mountain border crossing, the number of Argentine cars that entered Chile this year increased by 50% over the previous year and more than 150% compared to 2023. More Argentines traveled to Chile this year than people from all other countries together. Collectively, their purchases with Argentine bank cards increased 438% in Chile this year, according to data from the consumer segment monitored by the Transbank payment processor.
In fashion malls, such as Arauco Park and Costanera Center, the distinct sound of the Argentine Spanish, with all its Italian inflections, resonates day and night, and in parking lots, the blue and white plates of the “Argentine Republic” are everywhere. They are there to buy Jordan Tennis, Zara Jeans, Lenovo Laptops and anything else they can put in a suitcase.
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The frenzy was triggered by Milei’s own policies. Desperate to quickly contain rampant inflation, he insisted on maintaining the virtually stable weight over the dollar – a measure that maintains low import prices and sends a broader sign of stability to a devastated country by decades of economic chaos.
But in the process, the weight has strengthened so much, considering inflation, which is making it incredibly cheap for middle and high class Argentines to consume these imported products. And as Chile has fees so much lower than Argentina – almost 30 percentage points less, for example, in clothes – thousands of people cross the border every day to make these purchases. This has become such a business for stores in Santiago that some of them exempt Argentines from a rule that requires customers to insert a Chilean identity number when shopping online.
These purchases “are clear evidence of currency misalignment,” says Andrés Abadia, chief economist for Latin America at Pantheon Macroeconomics. Like many other analysts, Abbey estimates that weight is at least 20% – and perhaps up to 30% – overvalued over the dollar. And it is this overvaluation, almost more than anything else, which is triggering a race to the coin that Milei himself called “panic.”
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Maintaining investors’ confidence in an overvalued currency is always a challenge for policy formulators, especially at a time like the current one, when milei is accumulated that Milei is losing popular support they need to extend deep fiscal cuts and implement their free market reform agenda. With the important legislative elections of a term of office scheduled for the end of October, investors have frantically withdrawn their money from the country, fearing that Milei will be dollar and have to abandon their weight defense.
Milei and his economic team argue that weight has been valued and promise, as they have been doing for months, that they will not allow it to ride and rekindle inflation. But not even the US promise to help Milei – an ally close to President Donald Trump – to avoid devaluation greatly contributed to slowing capital outs. After a brief break, they recovered last week.
So much strong currency is being spent in Chile – the total now reaches billions of dollars – that Argentine customs authorities have begun to suppress. They open trunk of car and bags along the mountain border charts and impose fines on those who caught bringing back goods more than $ 300. The spending limit rule has existed for decades, but only now, the travelers say, the authorities are applying it, albeit sporadically.
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“Even with a fine, it is often even cheaper than buying the same thing in Argentina,” says Lur Carreras.
Carreras, a travel agent that organizes personalized shopping tours for young women, is part of a craft industry that has emerged quickly to enjoy the boom. There are bus rides created exclusively for buyers, social media influencers offering tips from bargains and even personal shopper – think of Instacart, but bought across the border instead of the other side of the city.
One of these buyers is Gabriel Damiani. He started a few months ago, after seeing his girlfriend make a lot of money as a personal shopper.
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Damiani fears having discovered the business a little late: if the weight plummeted suddenly, as has happened so many times before, the boom will reach an abrupt end. This possibility was also in Analia Raymundo’s mind as she left a H&M store on Costanera Center the other day with her mother and daughter.
“Sometimes it’s a good time to buy and sometimes not,” he said.
For now, the frenzy gives few signs of decreasing.
Raymundo’s shopping cart was crowded on that H&M bag day and other stores. And some Marriott blocks Nathalie Diaz watched a scene at the Boulevard Suites hotel that rivaling Carolyn Perez had witnessed.
Díaz, a hotel receptionist, describes that he saw this family of Argentines stacking box after box of items they had bought in their Ford F-150 brand new truck. After full to the edge, they set out and headed toward the border.
Minutes later, they turned and ran back to the hotel, where the team was waiting to deliver two shopping boxes they had left behind.
