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Venezuelan currency flip hogs airline seats

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By USA Today
Monday, Oct. 21, 2013, 10:00 p.m.
 

CARACAS — Manuela Diaz has been waiting months to visit her daughter who is studying in the United States.

Diaz has her passport, a valid U.S. visa and money for the trip. But she can't get an airline ticket.

“All flights are booked through early February,” says Diaz, 53, whose daughter is attending school in Pennsylvania.

The reason flights are booked is because enterprising Venezuelans are taking up the seats to exploit a loophole in foreign exchange controls that allows them to reap huge profits by exchanging their bolivars for U.S. dollars abroad.

International flights from the South American country have been full for months as thousands of Venezuelans called “currency tourists” book all available seats to take advantage of a mushrooming black market trade in their own currency.

With the value of the Venezuelan currency, the bolivar, dropping, demand for stable currencies like the dollar is high. But Venezuela does not allow people to change their money for dollars except under strict circumstances, one of which is to obtain money to spend overseas.

Venezuelans who possess an international airline ticket can exchange their bolivars for dollars through the Venezuela foreign exchange agency at the state-set rate of 6.3 bolivars per dollar. One can get up to $3,000 in dollars this way.

The dollars are credited to travelers' credit cards and when abroad, the travelers withdraw the money via a cash advance. With the cash in hand, travelers return to Venezuela where they sell the dollars on the black market for 45 bolivars to the dollar, a much higher rate they what they paid for the dollars before they left.

So, a Venezuelan who gets $3,000 for his 18,900 bolivars can sell the U.S. currency then for 135,000 bolivars, a 700 percent return on investment.

“It's easy money, and a profitable way to supplement your income,” says Luis Molino, a 35-year-old dentist, who went to Peru to do the el raspao, or scrape, as it is called.

 

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