Having now changed money with arbolitos twice, and given the scarcity of information out there on what’s involved, I thought I’d write up my experience. I probably wouldn’t have done it without the help of an anonymous member (he knows who he is, if he’d like an acknowledgement, please pm and I’d be delighted, just didn’t want to presume) who gave me some concise and helpful tips. I consider myself by no means an expert on this topic, but write in the hope it’s useful. I like writing, so I’m afraid it’s wordy.

What is it and why?
Argentina’s President Kirchner is a bit like a toned down Hugo Chaves. She is a populist president elected with a landslide majority (54%) on a platform of “give money to the poor man”. As with all the presidents of such countries you don’t need to look to far back to find the true blue aristocratic blood in her, and so while the public platform is “give money to the poor man”, the implicit platform is “without taxing the rich man enough”. This equation obviously does not balance itself very well in the long term, and so the Argentine government has imposed currency controls. This means it is illegal to transact in FX unless you do so through the national Bank, at the rates it has set. In fact, it may not even be legal for Argentines to do FX full stop – but I just don’t know the scoop there.

This enables the government to print money without the most obvious effects (FX rate dropping through the floor) so they can pay for all the programs and get the poor votes without taxing the rich too much. What it doesn’t do is stop the less obvious effects of printing money, like inflation. It’s up for debate whether the benefits the poor get (tube ticket costs about US$30c) are negated by inflation of 25% (or at least that’s the estimate), but I am drifting off into politics so I shall stop.

Needless to say however, than in a free country, demanding nobody does FX is a bit like pushing water uphill. There is simply too much demand for FX and so a market is created. Enter the arbolitos.

Why would I want to do it?
As of writing (Feb 2013) the Argentine peso is subject to a steep “backdoor” devaluation due to money printing. While the National Bank rate is around 4.9 pesos to the USD, the black market rate is around 7.4-7.5 pesos to the dollar. This hasn’t quite rung home to Argentines yet, and so far I have found that everyone who starts asking for dollars (hotels, hire cars etc. etc) is very happy to change the currency to pesos at the national rate. This effectively means that you are able to get a 30% discount on anything you spend in the country. This of course is only worth it if you consider the risks less than that – if not, well, it’s not for you.

Who and where?
The arbolitos I have met are simple working men. They make a living by exchanging FX, just like the big companies in the West. But here’s an important point. It’s a real business, with a service subject to supply and demand just like anywhere. While there are probably shady dealers out there, ripping people off is bad for long term business – it destroys brand equity, and the arbolitos, like any small businessman understand this only too well. Combining this with the truly remarkable respect Argentines have for order and some obvious precautionary steps means in my opinion this is a low risk transaction. You of course might think otherwise, in which case, don’t do it. As an aside, the spread the arbolitos give (i.e. how much less you would end up with in your pocket if you do two back to back transactions) is less than the real cowboys who are the FX dealers in major airports like Heathrow, where I have seen a quite proud dealer sat underneath a large “Commission Free” sign dealing USD/GBP at 2.1/1.1. It’s up to you to judge who the real criminal is. But I digress once more.

The arbolitos can be found on Florida Street between Corrientes and Cordoba. This is a main shopping area, and you will notice it is right smack in the centre of town. The business works like this. There are tons of sales reps out on the street. Every 20m somebody will ask you “Cambio, cambio”. The real business is done in an office somewhere nearby.

How do you do it?
First off, prepare. Before you leave for Argentina, work out a rough budget. If you are planning to buy pesos, make sure you get new US$100 notes as they get the best rate. I have not tried other currencies, but I think the US$ market is by far the most liquid one, so stick to it to avoid piling on unnecessary risk. The market is big and mainstream enough to have plenty of web sites which tell you the black market rate (take a look at DolarBlue.net - precio diario del Dolar Paralelo en Argentina ), and it has also been front of the news on TV this week because of the rate at which the peso is falling.

On your first day, take a small amount of money with you and nothing else. This needs to be an amount you’re happy to lose. Walk the Florida street two or three times and get a feel for the place. You should notice several things. There are several types of policeman. The Municipal (i.e. Buenos Aires) police quite openly stand next to the arbolitos and don’t care. I’m not sure the Policia Federal would have the same view. And if you see people with AFIF on their jackets, today is not the day for they are the money police.

As you walk, ask several people what rate you will get. If your Spanish is up to it, tell them how many notes and how much. If not, write it down on a piece of paper. They will give you a rate readily.

Once you have a feel for the rate you’d be happy to transact at, pick your guy. The basic requirement here is that you need to be comfortable going into an office building (i.e. traditional dark staircase) and up a cage lift that runs between the stairs with just you and him in the lift. I would personally not pick someone I couldn’t run away from, or at least stand a chance if things got physical. Then get his rate, and if you’re happy, follow him to the FX place. Make sure you note exactly where it is so you can come back the next day.

When you go into the office, you will see a man who should confirm the rate. At this point, there will be a little “I’ll show you mine if you show me yours first” tension , but as you are only changing a small amount be bold and go for building trust – remember, you are coming back tomorrow! Make sure you learn what the notes look like – the 100 peso note has a metal strip running down it on one side. When the currency is counted all the notes should be aligned so that the strip can be seen. If you need to turn notes to see the strip, something is fishy. Also make sure that when they count they put the currency on the desk so you can see it – otherwise there’s a trick where they count the same notes twice.
Once you have your money, off you go. Of course, make sure nobody follows you. The next day, when you come back, you are cutting out the middle man sales rep and should get a better rate to about 0.1 pesos more. You could of course always haggle, but given the spread between the official rate it hardly seems worth it to me.

What are the risks?
I think the risks you can minimise are as follows:
- Fake notes. Learn what they look like, and don’t go back if you got scammed on day 1!
- Fake counting. As above.
- Police raid while you transact. Drop your money on the floor, or pretend you thought it was a travel agent. You’ll probably be able to bribe your way out of it one way or another
- You get pick pocketed on the way in or out – but that’s just schoolboy errors

The risks I don’t think you can minimise:
- Peso gets devalued. In my mind this is a question of when not if. If it happens while you’re halfway to Ushuaia with a pannier full of pesos, you’ll see prices likely double overnight (that’s what happened last time) and you’ll be wishing you had your dollars back. Or worse still, everyone starts demanding dollars and you have a kindling material with a story.
- You overestimate how much you need and get stuck with pesos. I have not yet tried peso to FX conversion with arbolitos.
- You bump into your sales rep on your second visit (nearly happened to me). He’ll likely ask you for some money, and you’ll have to haggle and have more headaches.

Not for everyone, but hope it helps.

A comprehensive account.

Thanks