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Latin Business Traveler 26 Apr - 4:43 PM
Black Market Currency Trading: Worth the Risk?
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Exchanging dollars for local currency in Venezuela and Argentina can make sense, but carefully consider all the options first.Business travelers arriving in Venezuela and Argentina will quickly learn that trading U.S. dollars or Euros for local currency on the black market has become an ingrained part of daily routines. Spurred on by skyrocketing or wildly fluctuating exchange rates stemming from both countries' difficult economic conditions, many visitors simply abandon any attempt at legal currency exchange. Before deciding whether or not to dabble in these technically illegal transactions, however, it's important to carefully evaluate the risks and rewards of playing the black-market game. Company Credit Card or Reimbursement: Stay OfficialFor well-healed corporate travelers who either benefit from a generous per diem reimbursement rate from their company or who can simply put all of the expenses on the company credit card, it makes sense to avoid the possible pitfalls of the black market altogether. Even in Venezuela, where the high cost of such basic expenses as hotel rooms, dining and taxi rides make doing business in New York or London look downright inexpensive by comparison, the risk of running afoul of the law will likely outweigh the benefit of hefty savings on daily expenses. Tighter Budget: Consider Black-Market Exchange in VenezuelaFor those on a tighter budget, however, the 50% to 75% savings that black market currency exchanges provide may quickly add up to big savings. According to Xpatulator.com, a site that evaluates the cost of living of 732 cities in the world, Caracas ranks as the seventh most expensive place on earth. Venezuela's highly overvalued Bolivar currently trades on the official exchange rate at 4.3 Bolivar to 1 U.S. dollar. Given the vociferous hunger for dollars and Euros in that nation, black-market exchange rates of up to four times the official level can be obtained for sums of $1,000 or more. Even for a significantly smaller amount, those who hold cherished greenbacks, or even Euros, can receive two to three times more Bolivares than the official rate would permit. Visitors arriving at Maiquetía, the international airport that serves Caracas, will quickly be approached and invited to exchange currency if they project even the slightest appearance of a foreign businessperson or tourist. During a typical stay in the country, such visitors will be approached time and time again and invited to change dollars at a very beneficial rate. A discrete inquiry to a hotel bellman or taxi driver will also open the door to black market-type transactions. In Argentina: Little Black-Market AdvantageIn Argentina, the cost of living is not as inflated. So, although the same basic structure of unofficial currency trading exists, the financial benefits of black-market ventures, compared to the situation in Venezuela, are somewhat more modest. The Argentine Peso currently trades at just less than 5 pesos to 1 U.S. dollar. The black market rate of around 7 pesos to the dollar represents about a 40% benefit. Avoid Illegalities by Negotiating to Pay in DollarsA common practice that negates the outright illegality of black market trading is offering to pay for goods and services with dollars. If the offer is accepted - and given the high demand for U.S. currency, it often is - the rate in Argentina generally falls between the official and black market rates, producing a net benefit of about 20%. In Venezuela more than double that benefit can be anticipated. Before deciding to exchange currency via the black market, consider the risks and the benefits, and always remember that it is illegal. Just like jaywalking, however, many do it without giving it a second thought.