The Black Market.
VENEZUELA | Sunday, 5 July 2009 | Views [150] | Comments [1]
What is the most important thing in the world?
Money. American Money.
The exchange rate here in Venezuela is insane. The National rate you can get at a bank or an atm is 2 Bolivars for every Dollar. Yet, on the black market you can get a rate that ranges from 4.5 to 6 (sometimes even 6.2) if you are really good at haggling and you find someone desparate for US cash. I was aware of this issue before, but was not quite sure what it would mean in reality. Mostly, becaue I´m bad at math.
I was a bit nervous about changing money on the black market, but it turns out it provides an exciting adventure. The first place I found to change was an old bookstore next to a ferry ticket agency. I asked about the rate and at 5.7% I decided I should change a large amount because that was fairly good. So here I am, in a back room of this old place counting out thousands of Bolivars in secret, not even quite sure what the conversion would be. You have to be really careful that the police don´t see any of this because you will be immediately arrested. Nonetheless, it is widely accepted and happens just about everywhere.
Another man I met in Puerto La Cruz has spent years in jail for changing money, yet he still continues to do it on the street in broad daylight. He works out in front of an amazing restaurant. The restaurant is owned by a man who tells stories of a time when he used to work for Saddam Hussein. Although unbelieveable, his stories are so real that I cannot help but trust him.
SO, I brought some US dollars, but didn´t want to bring too much because of the risk of robbery. I thought that once my cash was gone I would just get money out of the bank at the National rate. Boy, was I wrong. After getting used to the exchange rate I have realized that doing it by the legal rate is insane and completely out of the question. It would be about double the cost for me to live in Venezuela than in New York City, LA,or any other ridiculously expensive city.
But since I will someday run out of cash, I´ve looked into the alternatives. Two options exist. I can either transfer money through paypal to someones elses account and they will give me a better rate (usually around 4.5). Or, I could hop the border to Colombia and change my money there.
Anyway it works out, I will be fine and alive. But, I just can´t stop wondering how this affects Venezuelans. I think the reason that the exchange rate is so high is because of inflation. And I think the inflation is so high because of Chavez´s economic policies. And I think Chavez´s goal is to prevent high import levels of US products by keeping the exchange rate so high. I think it also relates to food shortages. There seems to be a shortage of basic necessities quite often here. Like sugar, milk, and butter.
Over the next 6 months, I´m gonna get to the bottom of this issue. What is causing the inflation? And how it impacts the poor?
But it seems as if, US dollars are embedded in the Venezuelan economy...so is Chavez actually accomplishing his goals.
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