The madness of the peso and the real: Argentines suddenly rich and Brazilians impoverished

Bruno, 30 years old and from Sao Paulo, cried his sorrows in Punta del Este, the summer destination of the wealthy classes in the Southern Cone: his reales no longer yield what they did before, while he cannot believe that the Argentines have passed from suffering the worthless pesos to becoming the kings of the beaches. “A party in Sao Paulo costs 80 or 90 reais (between 12 and 14 euros), but here in Punta del Este it costs almost 850 (about 130 euros)!” the Brazilian declares to EL MUNDO. “We can’t pay that, but I see that the Argentines can.”

The summer anecdote is frivolous in a region known for its deep inequalities and abundant povertybut it illustrates the phenomenon that accelerated in the final months of 2024: the two largest South American economies, Brazil and Argentinathey took opposite paths. While President Javier Milei forgot about the “peso that is not even useful for excrement” that he spoke of in the electoral campaign and went on to boast about the most valued currency of the year among emerging countries, Luiz Inacio Lula da Silva is unable to control the fall of the real, which closed 2024 as the most devalued currency: in January it was trading at 4.85 per dollar, and in December it reached 6.30.

These abrupt changes in the two most important countries of the subcontinent have visible effects on them and their neighbors. Brazilian beaches have been invaded by Argentines, for whom it is cheaper to spend the summer there than in their own country, Brutally more expensive in the last year. The same thing happens in Punta del Este, historically expensive for Argentines, and now more than accessible to them.

Argentina was, until a year ago, the supermarket from which neighboring countries were supplied. Those who could cross the borders easily, because they lived near them, bought in Argentina. It was done by the inhabitants of the Uruguayan city of Salto, who crossed to Concordia and left the warehouses in their country without customers; Chileans did it on massive shopping tours when crossing to Mendoza. And the same thing happened on the borders with Paraguay and Bolivia.

In Mendoza They still remember how damaging the avalanche of Chilean buyers had become for the local economy, destroying the products in wholesale supermarkets and leaving Argentines without the possibility of buying. Thus, in one of those supermarkets, Óscar David, a schedule was instituted for Chilean buyers and another for Argentine buyers.

In Allone of the favorite wineries of tourists who visit Mendoza, long for the good times when Brazilians bought in droves. “Tourism went down a lot,” he told THE WORLD Camila Amaya, host of tourists in Kaiken. “Brazilians, who literally took boxes of wine, today hopefully buy a few bottles. And many fewer Brazilians come than before.”

The most of 17 billion dollars that the Central Bank of Brazil has destined to support the real, without success, can be seen in the streets of Palermo, the tourist neighborhood par excellence in Buenos Aires: Don Julio, chosen year after year as one of the best restaurants and the best grill of Latin America, continues to be a magnet for tourism, but the crowds are smaller, because visitors have decreased in a city that has become as expensive as several European capitals, with the exception of transportation, which continues to be much cheaper.

And there are no signs that Argentina will become cheaper: on the contrary, Milei is in love with the “strong peso” and promises a lower rate of devaluation. A classic of the electoral years in Argentina. In 2025, Milei intends to gain presence and power in Congress, and to do so it needs to sustain the decline in inflation. A devaluation of the peso would be fatal for that plan.

Fear of the ‘strong dollar’

In Brazil, meanwhile, there is fear of the “strong dollar” that will apparently drive Donald Trump since January 20, and that would also harm an Argentina that sees the value of soybeans, one of its main exports, fall and fall.

warns him Claudia Moreno from Banco C6, which believes that things have become much more difficult in Brazil, the ninth largest economy on the planet. “The cost of a fiscal adjustment now is perhaps too late, as a result of the rise in the dollar, and that makes the task of the Central Bank more demanding, which will have to apply higher interest rates.”

Next year there are presidential elections in Brazil, and Lula, who is not giving up running for a fourth presidency, needs the economy to grow. In 2024, Brazilian GDP grew by 3.6 percent, according to Finance Minister Fernando Haddad, but the outlook for 2025 is different.