American Airlines stops taking payment in Argentine currency

[TexasTowelie]

FORT WORTH, Texas (AP) — American Airlines says it has stopped taking Argentine pesos as payment for tickets because of limits on its ability to convert the money into dollars.

Airline spokeswoman Martha Thomas said Wednesday that American would try to resolve the issue with the new government of President-elect Mauricio Macri.

American is continuing to operate 27 flights per week between the U.S. and Buenos Aires, more than any other airline, Thomas said. However, customers in Argentina must use foreign credit cards or dollars or other foreign currencies to buy tickets from American.

Under outgoing President Cristina Fernandez, Argentina responded to a shortage of foreign-currency reserves by sharply limiting the amount of dollars that companies could transfer out of the country

Read more: http://www.mrt.com/business/top_stories/article_53ec8a6a-93af-11e5-ba21-87ea2def4ea9.html

[jberryhill]

1. The street rate for dollars can be almost twice the official rate

One would swear the native greeting phrase is "cambio?", and they do like to say hello a lot.

[forest444]

3. It's a popular racket in Argentina - but all legal transactions are at the official rate.

Exports and imports are settled at the official rate. Local prices rise roughly in line with the official rate. When you use your credit card in Argentina, it's charged at the official rate. When Argentines use their credit cards abroad (and they love to travel), it's at the official rate.

A 60% devaluation would, therefore, impact the economy broadly and immediately. It goes without saying that U.S. companies doing business in or with Argentina would have their receipts devalued as well - hence American Airlines' decision (which they would have never taken if the gradual crawling peg would have been upheld, even with modifications, as it has up to now).

[forest444]

2. I should think, since he's planning a sudden 60% devaluation.

Which of course would mean that their $900 tickets are suddenly worth $550.