MercoPress, en Español

Montevideo, September 23rd 2018 - 06:43 UTC

Venezuela's shortage of cash means big business for some

Friday, December 22nd 2017 - 23:09 UTC
Full article
Cash is not available at Venezuelan banks in sums exceeding 10,000 Bs, (the price of 2 eggs), and usually in banknotes of 20 to 100 Bs. Cash is not available at Venezuelan banks in sums exceeding 10,000 Bs, (the price of 2 eggs), and usually in banknotes of 20 to 100 Bs.

In view of the hyperinflation in their country, Venezuelans have developed “creative” forms of business.

 First registered only near the borders with Brazil and Colombia, phenomena such as the cash exchange scheme of the new monetary cone (500; 1,000; 2,000; 5,000; 10,000; 20,000, 50,000 and 100,000 Bolivar bills) have rapidly become commonplace nationwide. Currently, those banknotes coexist with the older ones (2, 5, 10, 20, 50 and 100 Bolivars), which are the most abundant in the country.

However, cash is not available at banks in sums exceeding 10,000 Bs, (the price of 2 eggs), and usually in banknotes of 20 to 100 Bs, which means that a person can have up to 200 bills in their backpack to pay for a short-distance bus ride or other minor expenditures. The average Venezuelan can easily spend 30,000 Bs a day... or more.

In this scenario, some retailers offer discounts of up to 50% if paid in cash, others make ‘cash advances’ (for a 10 to 50% surcharge) and those known as “currency agents” capitalize on the supply and demand effect caused by the shortage of high denomination notes. Basically, it is like going to a money exchange parlorñ with 1000 $ in 100 $ bills and come out with 1400 $ in 5 $ bills.

In times of crisis, opportunities arise. Its legal framework has not yet been defined, and although it has not been well received by everybody, many Venezuelans regard it as a valid way to take more money home.

Categories: Economy, Venezuela.

Top Comments

Disclaimer & comment rules

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!