It used to be that the Venezuelan state participated in the country’s currency black market, dodging its own currency controls for fun and profit. Market players have told me they always assumed state oil company PDVSA was the source of the $100 million a week or more that were dumped into the old parallel market via selected brokers. After the parallel market was banned and became a black market, the government continued to speculate on dollar-bolivar spreads and moves. The mechanisms got more mysterious; one game being played by the PDVSA pension fund, was revealed in US court.
It now looks like the Venezuelan state halted its participation in the market sometime just over a year ago. It’s uncanny how the timing lines up with the Amuay explosion and the resulting massive importation of US motor fuel.
But still, someone is buying bolivars. It’s not tourists. There simply aren’t many foreign tourists in Venezuela. Expat workers buy some, yes. But I’ve heard from Venezuelans who have recently gone to Colombia that there is a fierce demand for cheap bolivars in Cúcuta, Colombia.
What do these Colombians do with those bolivars? They go to Venezuela and go shopping. Without bolivars, they can’t buy up price-controlled goods, cheap home appliances and even cheaper than you might expect wristwatches, and also pay off border officers on the return trip loaded with cheap milk. Let’s see what happens after Christmas, I’m chatting with one expert who predicts an further drop in the bolivar once Christmas-shopping Colombians stop propping up the price.
The price of a bolivar is already low, now to somewhere around 65. With prices like that, 160 bolivars for a 400-gram El Rey chocolate tablet at the Mercado de Chacao is about $2.50, or about half of what an 80-gram chocolate bar of the same quality would normally cost in a normal country. Yes, I’m stocking up. There is a slight surcharge on the milk chocolate bars, because, you guessed it, there’s no milk.