MERIDA, Venezuela — If you want to feel like a high roller, try exchanging some of your dollars for Venezuelan bolivares.
The hefty wad of cash you get for exchanging U.S. currency is enormous and could get even more unmanageable in the months ahead as the value of the Venezuelan bolivar continues to plunge in international markets.
I picked up this cumbersome stack of bills prior to entering Venezuela, in the Colombian border town of Cucuta. It was 6:30 a.m. on Monday and as we approached the international bridge that connects the two countries my taxi driver pulled over to a row of street stalls where vendors trade currency all day.
“The lady in purple is very trustworthy,” my cab driver said, nodding through the windshield.
I gave her $80 worth of Colombian pesos and she exchanged it for three embarrassingly thick wads of bolivares. The bills were too many to count.
“Each of those packs is 10,000 and the other is 7,500,” the roadside teller explained.
I had to take her word for it, and off we went into Venezuela, with approximately 27,500 bolivares stashed in my backpack. There was no way I could fit that kind of stash in my wallet. Banking in Venezuela now requires a backpack.
Technically it's illegal to trade Venezuelan currency in the black market. But it's what everyone who travels here does.
That's because if you go to a real bank, you're unlikely to find dollars and the ATMs work on the official exchange rate of six bolivares to the dollar. That's not as sweet a deal as the black market exchange rate of 330 bolivares to the dollar.
That wild discrepancy between the official rate and the black market rate has made Venezuela extremely cheap for travellers.
Here are the expenses on the second day of my trip in Venezuela.
The main reason for the disparity are Venezuela’s strict exchange controls and limits to the number of U.S. dollars that Venezuelans can purchase at the official exchange rate.
Venezuelans need dollars to import goods, to travel, or simply to hold as savings. But the short supply of U.S. dollars at the official exchange rate has created an unmet demand that fuels the black market exchange.
With oil revenues—the government’s main source of foreign income— plunging by 50 percent over the past year, the amount of dollars the government can sell at the rate of 6 bolivares is becoming increasingly smaller. That means more businesses and regular citizens are forced to look for greenbacks in the black market, inflating their value even more.
The government has attempted to buck the trend by exchanging currency to select businesses and individuals at an intermediate rate of 200 bolivares to the dollar. The special currency exchange system is known as SIMADI.
SIMADI has slowed devaluation somewhat, but not much. When I visited the Venezuelan border in late March the bolivar was trading at 250 to $1. Two months later, it’s trading at 330, and the price is expected to climb in the following months as Venezuela’s soaring inflation pushes more people to trade their local money for dollars to protect their savings.
For foreign travelers this means only one thing: Venezuela — which is already the cheapest destination in Latin America — will only get cheaper in the months ahead.
Manuel Rueda is a correspondent for Fusion, covering Mexico and South America. He travels from donkey festivals, to salsa clubs to steamy places with cartel activity.