div classBodysc17zpet90 cdBBJodivpBy Eliana Raszewskip
pBUENOS AIRES Reuters – Argentine peso bills, devalued by years of inflation now soaring near 60, are starting to cause a literal strain on wallets – with the largest banknote in circulation worth under 5 in commonly used exchange markets.pdivdivdiv classBodysc17zpet90 cdBBJodiv
pThat means people need to carry around huge wads of cash, a security concern and logistical headache for savers, businesses and banks.p
pThe situation marks Argentina out in the region, except perhaps for outlier Venezuela. The largest note in Mexico and Peru is worth around 50, in Brazil it is 40, in Chile and Colombia some 25 and in Paraguay 15.p
pIn Argentina the 1,000 peso note is technically worth 8.40 using the official exchange rate, but with strict capital controls limiting dollar purchases most people use alternative markets where the same amount gets you 4.80.p
pTen years ago, 1,000 pesos was worth 200. Until around two decades ago the same amount would have got you a full 1,000.p
p“I have to carry that huge wad of bills in my wallet, because it doesnt fit in my pockets, and I fear getting robbed,” said Laura, 40, a lawyer from capital Buenos Aires.p
p“The 1,000peso bill is no longer enough for anything. The monthly rent for my house is just over 50,000 pesos.”p
pYears of high inflation, tight capital controls since 2019 to prevent currency flight, and popular black markets for trading dollars have hit confidence in the peso.p
pThe low value of the biggest tender means many businesses in the cashheavy economy are left with huge physical piles of money at the end of the day. It is not unusual for people to arrive to pay larger outlays with bricks of banknotes.p
p“The denomination of the bills is very decoupled from the average transactions of the economy,” said Camilo Tiscornia, director of C&T Asesores Economicos, adding that this creates inefficiencies in the market. “You have to make ridiculous payments with a huge number of bills.” p
pA 1,000 peso note will hardly buy you two packages of topend toilet roll, while a childrens menu hamburger with fries in a fastfood chain comes in at 940 pesos.p
pWhile electronic payments have increased during the COVID19 pandemic, a large part of sales are still made in cash.p
pPresident Alberto Fernandez, who is trying to lead a “war against inflation,” unveiled newly designed banknotes on Monday, but there were no changes to the largest denomination. He contends that the solution is finding a way to curb inflation, not issuing bigger denomination bills.p
pA financial sector source said the situation was also straining bank vaults, where physical cash simply takes up more room and creates higher costs.p
p“For banks it is crazy time with operating and storage costs,” the source said, asking not to be identified. “Here we have entities that are saturated with banknotes.”p
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ppArgentina: Paying the bill – https:graphics.reuters.comARGENTINACURRENCYlbvgndljkpqchart.pngp
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pp Reporting by Eliana Raszewski Editing by Nicolas Misculin, Adam Jourdan and Rosalba OBrienp
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