BUENOS AIRES, Argentina (AP) -- A look at the winners and losers from the sharp devaluation of Argentina's peso Thursday following the lifting of currency controls:
Any business that exports is likely celebrating. The previous administration of President Cristina Fernandez overvalued the peso with a fixed exchange rate. The last year, that fixed rate was around 9 pesos to the dollar while on the black market a dollar fetched up to 16 pesos. Because international markets are largely conducted in dollars, and all business in Argentina was done at the official exchange rate, exporters experienced a constant "haircut" in the payments for their products.
Even before the devaluation, annual inflation was estimated at around 30 percent. Since Mauricio Macri won the Nov. 22 presidential election, prices rose even more than usual as businesses got ready for the devaluation. Foreign Minister Alfonso Prat-Gay said Wednesday that the government aimed to get businesses to maintain the same prices they had at the end of November, but many Argentines are skeptical.
REAL ESTATE (Winners)
Because of the gap between the official exchange rate and black market rate, property transactions had become increasingly difficult the last several years. Sellers based their prices in dollars, but buyers had limited access to dollars because of the currency controls. What's more, because of Argentina's high inflation, property loans are rare and almost always come with eye-popping interest rates.
ILLEGAL CURRENCY TRADERS (Losers)
The byzantine currency system spawned an industry that employed thousands of people to buy and sell currencies on the black market. At one end were the young men and women who hung around tourist areas and shouted "Change your dollars!" At the other end, high-level business people moved millions of dollars in illegal exchange houses called "cuevas," or "caves."
INTERNATIONAL INVESTORS (Winners)
In general, the currency restrictions made Argentina a tough place to do business. Imagine you were an American who wanted to invest $1 million in an Argentine business. Because all banking transactions had to be done at the official rate, your initial investment was worth about 9 million pesos, which meant a haircut on your deposit from the start. Getting your profits out of the country was also difficult because of the restrictions.
Argentina is one of the most visited nations in South America, with several million tourists coming each year to enjoy tango dancing to rodeo shows to typical barbeques. Most bring in dollars, euros or reais, the currency of neighboring Brazil. In recent years, many tourists eagerly traded their cash on the black market and got a much higher rate. With the peso floating freely, tourists no longer enjoy a more favorable rate as a cushion against Argentina's rising prices.