American Airlines announced it would no longer accept Argentine pesos for cash sales of airline tickets. All transactions must be made with either a credit card, bank deposit, or wire transfer. All prices for flights between the US and Argentina are listed in US dollars.
The announcement came shortly after Argentina’s government devalued the peso by more than fifty percent. In January 2023, it took 185 pesos to buy one US dollar. By November of 2023 it took 360 pesos to buy one US dollar. Following the devaluation, it now takes 820 pesos to buy one US dollar. The government plans to further devalue the currency by two percent per month. The move is part of an attempt to bring down the country’s inflation rate, which is well over 100% annually, and part of a sweeping package of economic reforms by the new administration.
It is unclear whether other international companies will follow American Airlines, but earlier this year a ferry that operates between Argentina and Chile announced it would stop taking Argentine pesos, only to later reach a deal with the government to continue accepting them.
Discussion Questions:
- Discuss the implications of the peso’s devaluation on Argentina’s imports and exports.
- Discuss the factors influencing American Airlines decision to not accept Argentine pesos.
Sources| Merco Press: https://en.mercopress.com/2023/06/17/chilean-ferry-agrees-to-keep-accepting-argentine-pesos; Google Finace: https://www.google.com/finance/quote/USD-ARS?sa=X&ved=2ahUKEwip_KLn5fODAxWQMlkFHSGxAvMQmY0JegQIARAk&window=1Y; Reuters: https://www.reuters.com/markets/markets-greet-argentinas-tough-pill-fix-economy-with-cautious-optimism-2023-12-13/; The Messenger: https://themessenger.com/business/american-airlines-shuns-argentina-peso-inflation; Unsplash: Photo by Joshua Hanson on Unsplash