The current (official) exchange rate for USD to ARS is around 1:5, but I've heard that due to the fluctuation recently there may be a way to get a better value for USD in Argentina.
Fist of all a short disclaimer: The blue market is an unofficial market not recognized by federal authorities and changing money there is illegal. Thousands of Argentinians use this market every day as buying dollars in the official market is almost prohibited by the government .
I will try to answer your question without entering into the details of the current political and economical situation which is currently driving Argentina.
As you pointed out, there are currently two very different rates for the Argentinian Peso (
According to Yahoo Finance the official exchange between $1 dollar and the peso is $4.96
What you mention in your question is what is known as the Blue Market
As stated in the disclaimer, currently it is very difficult for Argentinians to buy foreign currency which has made the price go up in the secondary market.
You can find the current value per $1
USD on many unofficial websites like PrecioDolarBlue. As for today $1
USD is about $7.50 pesos
Where can you trade in the Blue Market?
People selling the blue dollar are called "arbolitos" (little trees) and places where you can buy/sell the blue are called "cuevas" (caves)
While you are in Buenos Aires you can ask any cab driver, shop owner, hotel personnel, etc, for the closest arbolito or where to trade the blue market and they will be able to point you in the right direction.
Disclaimer again: Remember it is illegal (although AFIP (Argentinian IRS) does not seem to be chasing buyers)
One factor I would like to add: the "blue" exchange rate can be quite different in different places. Namely, when there are a lot of tourists around such as in Ushuaia or El Calafate in Patagonia, the supply of Dollars is much higher and the exchange rate will not be as good for you. It will not be as easy to find "cuevas" as in Buenos Aires (where they often find you), and the rate they offer will vary more.
For example, most hostels will exchange "blue" (hotels usually not), but they usually don't offer the best rate and only have a limited supply of pesos (whatever people recently paid for their rooms). It pays to ask around a little.
The site I used to look up the current exchange rate is http://dolarblue.net/ - which also shows the rate for Euros.
Update: In December 2015, the new Argentinian government removed the exchange restrictions, so the official exchange rate is now based on real market forces and the black market has lost its advantage.