2024-07-24 17:40:00
At around two o’clock in the morning, the bus stopped at Uspayata, a remote town high in the Andes Mountains. There were 30 Argentinians inside, with a thick wad of banknotes in their pockets, but a large empty suitcase at their feet.
Once border agents open the snowy trail that connects western Argentina to Chile, suitcases fill up quickly—laptops, jeans, underwear, towels, pans, forks, spoons, knives, anything else you can grab from store shelves. something down. But that doesn’t happen in a few hours. So the 30 Argentines had no choice but to wait by a gas station in the icy pre-dawn darkness for authorization to allow them to start buying.
“I can’t wait to get to the store.” Eleven hours later, the bus finally arrived in Santiago, and María Laura Bustos was one of the first people to get off. She was traveling with her daughter, had $1,100 and a list so long that she knew she wouldn’t have a chance to buy everything in the 23 hours before the bus returned to Argentina.
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For thousands of Argentines, Chile has become the new must-visit shopping mall. They are buying at full speed across borders in unprecedented numbers, In the process, President Javier Milley and his advisers in Buenos Aires came across a shocking fact. “Weight,” says managing director Fernando Losada Oppenheimer Corporation“It’s overrated.”
Once inflation is discounted, the yuan appreciates against other currencies, eroding trade and investment flows and putting pressure on Mr. Milley to devalue the currency for the second time since taking office in December. To him, the idea was unacceptable. A central promise of his campaign was to end rampant inflation, a curse that has long plagued Argentina, and a currency devaluation would once again drive up prices and undo much of his government’s lukewarm achievements.
Of course, at first glance it’s difficult to view the peso as a strong currency. After the Milei devaluation last December, the yuan fell 2% per month against the dollar, a gradual decline orchestrated by government technocrats. In less regulated markets, the peso has also fallen in recent weeks.
Its strength, or overestimation as Losada and others have described it, stems from the fact that inflation in Argentina, while slowing, remains high. Since the currency devaluation, consumer prices have surged more than 100%. The monthly inflation rate remains above 4%, much higher than the peso’s decline.
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All of this makes imported products cheaper for Argentines. As wages catch up with inflation, they can spend more and more dollars. But given that the country has long had a series of prohibitive tariffs – reaching 50% on some products – Most Argentines do not buy high-value imported goods in the local market.
So in times like this, when Argentines suddenly have extra dollar purchasing power, they take that money to Chile, where tariffs are much lower and the retail market is more competitive, and they buy imported products there.
The iPhone is one of the most attractives. There are also video game consoles and tablets. Indeed, electronics in general. For Bustos, the first priority is the laptop. They hurried to a large shopping mall in Santiago with their daughter and bought a Lenovo computer for $625 (in Argentina, the same model costs more than $1,000).
Once at the mall, they continue to quickly accumulate items in their shopping carts: oatmeal, placemats, towels, sheets, pants, T-shirts, sweatshirts.
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Most of the clothing is from H&M. Executives were shocked to see so many Argentines shopping at the fast-fashion chain’s 30 Chilean stores this year. So much so that they’ve begun adjusting their staff’s schedules — adding to their teams — to schedule vacations in Argentina instead of Chile.
José Manuel Castillo, who heads H&M’s operations in South America, said Argentines are easy to spot: they drag their empty suitcases down the aisles. He estimates sales to Argentina are up 200% this year. “Every month we see a new peak.”
Castillo has experienced similar cross-border consumption booms over the past decade, but he said there had never been such a rapid explosion. This echoes concerns expressed by many economists. Of course, the Argentine peso had been strong before, and Argentine buyers were flocking to Chile, but also to Uruguay, Brazil and even the United States, but What’s alarming them now is the magnitude and speed of exchange rate swings.
“The real exchange rate is appreciating much faster than in previous periods,” said Alberto Ades, director at NWI Management, an investment advisory firm in New York.
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Ades acknowledged that in some ways the peso has appreciated more on other occasions than it does now.
He said the problem is Argentina’s economy today is far less robust and resilient than it was in previous decades. Workers are less productive and, more importantly, the country’s foreign exchange reserves are also lower. (Millais’ plans to replenish reserves have been stalled in part by higher import spending.) “The equilibrium real exchange rate should therefore appreciate more than it has in the past,” Adès said.
Mire and his spokesman did not respond to requests for comment. However, both he and his key advisers have repeatedly stated publicly that they do not see a need to devalue the peso.
On the Chilean side of the border, narrow roads wind quickly through the mountains. Descends approximately 2,500 meters and can be reached in just two hours Los Andes, the first important city on the way to Santiago. Here, Jonathan Santibáñez enjoys the growth of his business.
Santibañez has a garage dedicated to changing tires. Typically, he said, two-thirds of his clients are Chilean. But on some days this year, the vast majority of cars lined up in front of his shop – about 80 percent – have Argentinian license plates. Just changing a tire can be a nerve-wracking trip. But Santibañez charges 33% less than the studio in Mendoza, Argentina. For example, a new set of Dunlop tires for a Peugeot sedan costs about $430 at his store. In Mendoza, that number would be more than $600.
Most Argentines who travel to Chile by car or bus come from Mendoza. This is the city closest to the border.
The number of travelers entering Chile through the crossing jumped more than 100% to 225,000 in March, April and May, before a June snowstorm closed the crossing for weeks. Bus tourism operators are busy increasing frequency. Travel agencies are popping up to offer packages to buyers. The one-night tour Bustos chose is the most popular.
Bustos said she’ll be back soon to buy things she didn’t have time to bring: a Dewalt drill for her husband, Nike joggers for her son and Adidas Samba sneakers for her daughter.
Gabriella Funes is also planning her second trip. He quickly spent the $600 he brought in this month. “I spent every last penny I had.” He said he would drive out next time. He would like more space to store bulky items, and, he noted, he will also be shopping for groceries in Chile. He would fill the trunk with cans of tuna, cans of mussels, chocolate bars, yogurt, everything except milk and eggs.
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