Actual earnings buying energy in Latin American nations

The actual outperformed the Mexican, Chilean and Colombian pesos towards the greenback (Credit score: Marcello Casal Jr./Agência Brasil)

The devaluation of the Argentine peso has made the neighboring nation an advantageous vacation spot for Brazilian vacationers. Actual buying energy good points aren’t an remoted case, nevertheless, as the mix of exterior financial elements and home political crises has depressed the worth of different Latin American currencies not solely towards the greenback but in addition towards actual cash. He plans to journey to sure locations in Latin America.

In line with information from the Decolar web site, cities akin to Buenos Aires and Bariloche (Argentina), Santiago (Chile), Montevideo (Uruguay) and Lima (Peru) have been among the many most wanted worldwide locations for the reason that starting of the 12 months. by vacationers in Brazil. The choice coincides with the checklist of nations whose currencies have depreciated greater than their true worth towards the greenback.

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In line with specialists interviewed by the Council of State Estadao, outperformed, for instance, the Mexican, Chilean and Colombian pesos towards the true greenback final 12 months. In line with XP economist Francisco Nobre, rising commodity costs are additionally placing strain on South American currencies because of nations’ dependence on merchandise traded in {dollars}.

Nonetheless, if the change charge of Latin American currencies varies loads, how do you do the maths to know if it is value going to a specific nation? In line with C6 financial institution finance educator Liao Yu Chieh, the reply is that this: you should analysis the costs of eating places, vacationer sights and meals objects in supermarkets.

All this helps to grasp not solely the conversion, but in addition how a lot the precise buy is in every vacation spot. “One of the simplest ways to make the most of the second of foreign money devaluation is to look at the price of dwelling within the nation and create a roadmap,” Chieh says.

BIG MAC INDEX. An financial index that may facilitate the duty is the “Huge Mac index” created by the American journal. Economist The information analyzes the worth of a fast-food chain sandwich in several nations in US {dollars}. “This index has limitations, however it’s a simple option to evaluate dwelling prices in several nations,” says Nobre.

In line with the survey, the common worth of a Huge Mac in Brazil in December 2021 was R$22.90. At the moment, the worth of a snack within the US would have been R$30.85 for a Brazilian, with a 25.77% lower in buying energy. Primarily based on the present change charge change, this lag will increase to 27.95% whereas the sandwich is at R$31.78.

HE Estadao It took the Huge Mac index under consideration to investigate the buying energy of the true in 11 nations (US and ten Latin American). In line with the index, actual has a better buying energy than utilized in 9 of those locations.

On the present change charge, the strongest efficiency of the Brazilian foreign money is towards the Colombian peso – 1 Colombian peso is the same as R$0.0012. Within the case of Argentina, the principle worldwide vacation spot for Brazilians, the peso has misplaced 22% towards the true and 23% towards the US greenback in a single 12 months.

From analyzed Latin American nations Economist, the true solely has decrease buying energy than the Uruguayan pesos. Presently, the standard McDonald’s sandwich will price R$30.82 within the nation, or 25.7% greater than right here.

PLANNING. If the change charge good points within the buying energy of the true, the shortage of planning through the conversion might undermine that distinction and even put the Brazilian at a loss. The C6 professional remembers that it is essential to pay attention to foreign money conversion charges and bank card utilization when touring internationally. “The price of foreign exchange is excessive in Brazil. Subsequently, vacationers want to pay attention to their wants,” he says.

One other tip from a finance educator (from any nation) is to purchase {dollars} as a substitute of pesos. “While you arrive at your vacation spot, you exchange to native foreign money, however many nations settle for funds in US foreign money,” he says.


Take note of the transformation

The change charge of Latin American currencies could be very unstable and it’s essential to do the maths effectively to know which nation has essentially the most benefit by way of buying energy.


One tip is for vacationers (from any nation) to organize themselves by shopping for {dollars} little by little as a substitute of pesos. In line with professional Liao Yu Chieh from C6 financial institution, along with the advantageous conversion, among the institutions typically settle for US foreign money.

Weak coin in hand

Because the currencies of many Latin American nations have depreciated, buying the native foreign money solely on the vacation spot prevents the patron from shedding cash by holding on to “snags” of weak foreign money; {dollars} can all the time be used on the following journey.


In line with specialists, not listening to change charges is usually a entice. Care must be taken when utilizing a bank card with an computerized 6% payment along with the IOF.

Past the Huge Mac

One other essential tip is to grasp not solely the foreign money conversion charge, but in addition how a lot actual cash is virtually value on the chosen vacation spot. Private finance specialists suggest that vacationers analysis subjects akin to restaurant costs, vacationer sights, and meals in supermarkets.

The knowledge is taken from the newspaper. State of Sao Paulo.

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