Summer in swanky Uruguay resort clouded by currency crunch

Fri Feb 8, 2013 12:43pm EST
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By Malena Castaldi

PUNTA DEL ESTE, Uruguay (Reuters) - Every summer, Argentines flock to Uruguay's glamorous Punta del Este beach resort to get tanned and be seen. But this season, currency controls in Argentina are keeping some visitors away and forcing others to tighten their belts.

Dollars are widely accepted in Uruguay and tourists tend to pay cash for holiday rentals. Argentina's virtual ban on foreign currency purchases has sent the black-market rate for dollars soaring, however, making a trip to "Punta" doubly expensive.

Prices in Uruguay are also being pushed higher by the country's strong currency and stubbornly high inflation.

The glitzy nightlife in Punta del Este and nearby resorts is noticeably tamer this year and fewer cars cruise the streets. Some beach vendors say sales have sunk and complain about penny-pinching visitors.

"It's very, very expensive. Extremely expensive," said Marcelo, 38, a vacationing Argentine merchant. "The same sunscreen we pay 69 pesos ($13.80) for in Buenos Aires, costs more than 200 Argentine pesos here."

"We're cooking everything and eating lots of pasta," he said. "Uruguay is beautiful but these prices are taking a toll."

The number of tourists visiting Uruguay dropped 11 percent in January from a year earlier, government data shows. January is normally the Southern Hemisphere summer's busiest month.

Tourism has been booming in the last five years in Uruguay, a laid-back country of about 3.2 million squeezed between Argentina and Brazil that boasts rolling pastures and well-kept beaches. Argentines accounted for 58 percent of visitors in 2011.   Continued...

A man drives his 1935 Ford A through the streets of the luxurious seaside resort of Punta del Este February 4, 2013. REUTERS/Andres Stapff