Disclaimer: trading in any unauthorized exchange center and/or using any non official exchange rate is illegal.
For a better understanding of this post, refer to the article of the exchange rates in Venezuela:
http://venezuela2015crisis.blogspot.com/2015/09/cencoex-sicad-simadi-and-dolartoday.html
There are several ways to trade $ and Bsf using the parallel rate, which can be found on DolarToday.com.
1- USD in cash
The USD amount is given in cash and the Bsf is via bank transfer, bank cheque or *briefcases might be needed* in cash. This practice is mainly used by tourists and people who do not own bank accounts in Bsf, and by people who do not own bank accounts in USD (inside or outside Venezuela). The $ seller is likely to get around 20% less Bsf than the price found in DolarToday, due to the high riskiness of the process.
2- Two-way bank transfers
Person A and person B both own accounts in USD, usually outside Venezuela, and accounts in Bsf. USA (Miami and Orlando mainly) and Panama are the most frequent countries for USD accounts, as large Venezuelan diaspora live there and as USD is the official currency there. Supposing A wants to buy $ from B, A transfers Bsf to B's account, and B transfers $ to A's (usually offshore) account. The $ seller is likely to get around 10% less Bsf than the price found in DolarToday, and this assuming that the bank transfers are free or near-free.
3- Selling imported goods
This is an indirect way of converting $ to Bsf, and seem to be legal. The Bsf buyer gets an imported good in $ (smartphone, medicines, clothes brands etc..) and sells it in Bsf in the Venezuela. Note that any new good coming to Venezuela has to be declared at the international port or airport of entry. Some websites like MercadoLibre facilitate and secure this kind of processes and payments. allowing Bsf credit cards, bank transfers and cash payments. The $ seller is likely to get around 10% more Bsf than the price found in DolarToday, as he would be charging the import service.
Sunday, September 13, 2015
Saturday, September 12, 2015
Funny But Sad Realities in the Venezuela of 2015
Any addition to the article is welcomed!
It is much easier and sometimes cheaper to wipe your ass with a 2 bolivars bill than with toilet paper.
Apparently it costs 250 Bsf to print a 100 Bsf note.
Everyone walking with supermarket bags containing diapers on the street. There is no baby boom in the country, but that's just in case they decide to have one.
You rarely or don't find McFries at McDonald's. They might be more expensive than the burger, if available. McYucas it is.
You can fill your car with gasoline for less than a cent of a dollar (dolartoday rate).
You can take the cheapest flight in the world - an internal round trip flight may cost less than 10$ (dolartoday rate).
A pack of condoms can cost above 750$ on the official rate.
Without a debit or credit card, you might need a pound of cash to pay in a restaurant.
There is a bottled water shortage because there is no plastic for bottles.
Venezuela is giving free oil to Cuba. Cuba imposes visa restrictions for Venezuelans.
Apparently Venezuela is importing gas and gasoil, despite being the country with the most proven petrol reserves,
PDVSA is burning millions of $ of leaking natural gas every day because, you know, Venezuela is an oil producing country, not a gas producer.
It is much easier and sometimes cheaper to wipe your ass with a 2 bolivars bill than with toilet paper.
Apparently it costs 250 Bsf to print a 100 Bsf note.
Everyone walking with supermarket bags containing diapers on the street. There is no baby boom in the country, but that's just in case they decide to have one.
You rarely or don't find McFries at McDonald's. They might be more expensive than the burger, if available. McYucas it is.
You always have to ask if they have bread in the bakery.
You can fill your car with gasoline for less than a cent of a dollar (dolartoday rate).
You can take the cheapest flight in the world - an internal round trip flight may cost less than 10$ (dolartoday rate).
A pack of condoms can cost above 750$ on the official rate.
Without a debit or credit card, you might need a pound of cash to pay in a restaurant.
There is a bottled water shortage because there is no plastic for bottles.
Venezuela is giving free oil to Cuba. Cuba imposes visa restrictions for Venezuelans.
Apparently Venezuela is importing gas and gasoil, despite being the country with the most proven petrol reserves,
PDVSA is burning millions of $ of leaking natural gas every day because, you know, Venezuela is an oil producing country, not a gas producer.
Venezuela in 2015: The Insecurity Explained (Part 2)
For a better understanding of this post, please read part 1
In Part 1, the black dollar direct effect on the population was elaborated. The dollar negro also has another role, indirect, in causing the insecurity. This part 2 explains the main reason justifying the recent decision of the Venezuelan government of closing the border with Colombia.
Regulated Goods and Smuggling:
Most of the basic goods and necessities are price-regulated, and selling a regulated good at an unregulated price is subject to sanctions, often severe ones. Examples of regulated products are flour, sugar, gasoline, toilet paper and medicines. If these goods are imported, the CENCOEX (6.3 Bsf/$) rate is used.
The local production is not sufficient, the government is often $-stingy to permit the importation of goods to be regulated or the importation of raw materials necessary for local production (like malt for beer). This naturally causes the shortages and the tremendous lines (colas) of people trying to get the regulated goods, in front of supermarkets and pharmacies. The transportation of these goods and necessities is sometimes a cause of the problem, as the trucks could be attacked and stolen. Some people would just hijack a bakery to steal the food, in very desperate cases.
Aside from those points, another issue seem to be the main cause of the shortages: smuggling. It is said that perhaps 40% of regulated goods are illegally smuggled outside the country (mainly to Colombia). Some of the goods are reintroduced to Venezuela as an imported product, other are just sold in Colombia and the COP are converted to $ and then to Bsf in the black market (basically from 6.3 Bsf to more than 100 times that rate).
One of the smuggling schemes is the following.
The good is bought (or stolen) at basically nothing (since it is regulated in Venezuela) and is sold to some guy in Colombia, in COP (Colombian pesos, convertible to $). The guy in Colombia resells the good to Venezuela which will regulate it: the government is forced to pay in $. The smuggler and the guy in Colombia (surely related) will receive huge profits converting these $ or COP to Bsf the black market. In some cases, the money made will be used to extend his (criminal) network. So you're stuck in a growing spiral.
Smuggling is very often facilitated or orchestrated by corrupted police and army officials and ex-officials. They particularly traffic gasoline. One gasoline truck storing 30000 Liters can make 3000 Bsf in Venezuela, or around 4.2$ (black market rate in September 2015). It's around 1$/L for gasoline in Colombia. Just imagine the profit that the smuggler is making by selling his gasoline at 0.2$/L. I will let you do the math.
Corrupted officials ex-officials:
Aside from their role in the smuggling explained above, they are the ones who own guns and/or can procure them very easily, selling them to gangs and individuals who will cause terror and insecurity. I have heard that at least one crime over two involve a corrupted current or ex official.
Regulated Goods and Smuggling:
Most of the basic goods and necessities are price-regulated, and selling a regulated good at an unregulated price is subject to sanctions, often severe ones. Examples of regulated products are flour, sugar, gasoline, toilet paper and medicines. If these goods are imported, the CENCOEX (6.3 Bsf/$) rate is used.
The local production is not sufficient, the government is often $-stingy to permit the importation of goods to be regulated or the importation of raw materials necessary for local production (like malt for beer). This naturally causes the shortages and the tremendous lines (colas) of people trying to get the regulated goods, in front of supermarkets and pharmacies. The transportation of these goods and necessities is sometimes a cause of the problem, as the trucks could be attacked and stolen. Some people would just hijack a bakery to steal the food, in very desperate cases.
Aside from those points, another issue seem to be the main cause of the shortages: smuggling. It is said that perhaps 40% of regulated goods are illegally smuggled outside the country (mainly to Colombia). Some of the goods are reintroduced to Venezuela as an imported product, other are just sold in Colombia and the COP are converted to $ and then to Bsf in the black market (basically from 6.3 Bsf to more than 100 times that rate).
One of the smuggling schemes is the following.
The good is bought (or stolen) at basically nothing (since it is regulated in Venezuela) and is sold to some guy in Colombia, in COP (Colombian pesos, convertible to $). The guy in Colombia resells the good to Venezuela which will regulate it: the government is forced to pay in $. The smuggler and the guy in Colombia (surely related) will receive huge profits converting these $ or COP to Bsf the black market. In some cases, the money made will be used to extend his (criminal) network. So you're stuck in a growing spiral.
Smuggling is very often facilitated or orchestrated by corrupted police and army officials and ex-officials. They particularly traffic gasoline. One gasoline truck storing 30000 Liters can make 3000 Bsf in Venezuela, or around 4.2$ (black market rate in September 2015). It's around 1$/L for gasoline in Colombia. Just imagine the profit that the smuggler is making by selling his gasoline at 0.2$/L. I will let you do the math.
Corrupted officials ex-officials:
Aside from their role in the smuggling explained above, they are the ones who own guns and/or can procure them very easily, selling them to gangs and individuals who will cause terror and insecurity. I have heard that at least one crime over two involve a corrupted current or ex official.
Venezuela in 2015: The Insecurity Explained (Part 1)
For a better understanding of this post, please read exchange rates and social classes articles.
http://venezuela2015crisis.blogspot.com/2015/09/cencoex-sicad-simadi-and-dolartoday.html
http://venezuela2015crisis.blogspot.com/2015/09/the-social-classes-in-venezuela.html
The rise of the black market dollar is a main source of the social crisis in Venezuela. Most Venezuelan do not know it, as they haven't lived abroad. As many of goods (clothes, electronics, some food etc) are imported and/or sold using the black market rate, the effectiveness of the salary of a Venezuelan is reduced by... 100 times or more, since the black market $ is more than 100 times the CENCOEX rate. Take the example of a Snickers bar. It costs 0.8-1$ in the USA or Panama. You would find it at 600-800 Bsf (Sept 2015) in Venezuela, which is much more than what a local person would earn per day. Let's take a more detailed example.
A junior engineer would earn around 12000 Bsf per month until last few months. Now this engineer would earn 15000 Bsf (increase due to inflation). This engineer has studied hard at least 5 years to get his degree. But what is 15000 Bsf?
15000 Bsf = 2380$ on CENCOEX rate. But his salary is not an essential importation good.
15000 Bsf = 1111$ on SICAD rate. But this rate practically doesn't exist anymore.
15000 Bsf = 75$ on SIMADI rate. You need hours of discussion with the bank to trade Bsf to SIMADI and there are rules and restrictions. But wait, 75$/month? Are we in the poorest country in the world or what? Oh but anyways, that's not even the rate they use for most goods.
15000 Bsf = ~21$ on the black market rate in September 2015. Don't be surprised if it becomes 18$ in October. So yea, a junior engineer practically earns 21$/month in Venezuela.
With 15000 Bsf/month without any additional financial support, you are in the lower-middle class. You barely (or don't) get bonuses from the government, you have to wait hours on weekends or before work in the morning (starting at 3AM in some cases) in the line to perhaps get your subsidized allowed ration of sugar, flour, coffee etc. and maybe some chicken, and cheese, and if you're lucky diapers for the baby you will have in 4 months, because you know that in 4 months diapers will become as rare and expensive as diamonds. And how much does the newest (650$) iPhone cost? 31 months of salary without inflation. Way too elusive.
So basically a pair of shoes can cost 4 months of salary, a t-shirt half his salary, a dinner at a restaurant 1/8 of his salary. A small McDonald's burger is more than a day of work for minimum wagers who earn ~8000 Bsf/month.
Now what causes the insecurity?
Why would any person study 5 years in university to get that miserable salary which will never be able to get him an iPhone, when he can just steal one iPhone per month from some rich guy walking on the street and sell that iPhone for a lot more than what he could have earned in 3 years, and rest and live like a king for the rest of the month? Well thank God the (99%) good and kind people of the lower-middle class do not think like that. But (most of) the poor people of the barrios? Well that's what they do! The insecurity used to be present only in those barrios a few years back, but because of the huge rise of the black market dollar value, the "malandros" started coming to any richer areas where they would steal or even kidnap and shoot any person for what he has or can represent $ (watch, phone, car, gold etc). So basically, a tourist walking on the street is someone with a giant $ marked on his face.
http://venezuela2015crisis.blogspot.com/2015/09/cencoex-sicad-simadi-and-dolartoday.html
http://venezuela2015crisis.blogspot.com/2015/09/the-social-classes-in-venezuela.html
The rise of the black market dollar is a main source of the social crisis in Venezuela. Most Venezuelan do not know it, as they haven't lived abroad. As many of goods (clothes, electronics, some food etc) are imported and/or sold using the black market rate, the effectiveness of the salary of a Venezuelan is reduced by... 100 times or more, since the black market $ is more than 100 times the CENCOEX rate. Take the example of a Snickers bar. It costs 0.8-1$ in the USA or Panama. You would find it at 600-800 Bsf (Sept 2015) in Venezuela, which is much more than what a local person would earn per day. Let's take a more detailed example.
A junior engineer would earn around 12000 Bsf per month until last few months. Now this engineer would earn 15000 Bsf (increase due to inflation). This engineer has studied hard at least 5 years to get his degree. But what is 15000 Bsf?
15000 Bsf = 2380$ on CENCOEX rate. But his salary is not an essential importation good.
15000 Bsf = 1111$ on SICAD rate. But this rate practically doesn't exist anymore.
15000 Bsf = 75$ on SIMADI rate. You need hours of discussion with the bank to trade Bsf to SIMADI and there are rules and restrictions. But wait, 75$/month? Are we in the poorest country in the world or what? Oh but anyways, that's not even the rate they use for most goods.
15000 Bsf = ~21$ on the black market rate in September 2015. Don't be surprised if it becomes 18$ in October. So yea, a junior engineer practically earns 21$/month in Venezuela.
With 15000 Bsf/month without any additional financial support, you are in the lower-middle class. You barely (or don't) get bonuses from the government, you have to wait hours on weekends or before work in the morning (starting at 3AM in some cases) in the line to perhaps get your subsidized allowed ration of sugar, flour, coffee etc. and maybe some chicken, and cheese, and if you're lucky diapers for the baby you will have in 4 months, because you know that in 4 months diapers will become as rare and expensive as diamonds. And how much does the newest (650$) iPhone cost? 31 months of salary without inflation. Way too elusive.
So basically a pair of shoes can cost 4 months of salary, a t-shirt half his salary, a dinner at a restaurant 1/8 of his salary. A small McDonald's burger is more than a day of work for minimum wagers who earn ~8000 Bsf/month.
Now what causes the insecurity?
Why would any person study 5 years in university to get that miserable salary which will never be able to get him an iPhone, when he can just steal one iPhone per month from some rich guy walking on the street and sell that iPhone for a lot more than what he could have earned in 3 years, and rest and live like a king for the rest of the month? Well thank God the (99%) good and kind people of the lower-middle class do not think like that. But (most of) the poor people of the barrios? Well that's what they do! The insecurity used to be present only in those barrios a few years back, but because of the huge rise of the black market dollar value, the "malandros" started coming to any richer areas where they would steal or even kidnap and shoot any person for what he has or can represent $ (watch, phone, car, gold etc). So basically, a tourist walking on the street is someone with a giant $ marked on his face.
The Social Classes in Venezuela
Please not that this article is in no way intended for discrimination, and is written for the sole purpose of helping understand other articles. For a better understanding of this article, please refer to http://venezuela2015crisis.blogspot.com/2015/09/cencoex-sicad-simadi-and-dolartoday.html
Let's suppose the Venezuelan society is composed of 4 social classes: the poor, the lower-middle class, the upper-middle class and the rich.
1- The poor:
They can live in a tiny house in the rural part of the country, in a "barrio" of Caracas or other. They are poor but (until recently) they are far from thinking of suffering of hunger or malnutrition. They receive a lot of government subventions, like food or clothes. Where in the world do poor people frequently eat meat and chicken? Venezuela. Some of the poor people, mainly those from the "barrios", are the "malandros". They are parts of organized crime schemes, gangs or just lonely wolves.
2- The lower-middle class:
They get less subventions from the government than the poors, and they are the people who struggle the most to live. Many of them were in the upper-middle class.
3- The upper-middle class:
Those people live in apartments or small houses in the city, They were either rich before the economy got bad, have a well-paid job (senior engineer for example), have family helping them from abroad ($, COP....), or recently sold a land or apartment etc.. They typically drive cars no newer than ~2008 models.
4- The rich:
From rich to multi-$millionaire. Any tourist or foreigner. The easiest way to define a rich person in Venezuela is the following: a person who does not do the "cola" (wait in line) to get goods, because this person can afford buying them at a "premium" price (like 10 times more, from specified shops) or employ other people only to do the cola to get her the wanted goods. This person, supposing she's not related to the army or the government, either earns in foreign currency (which is traded in the black market to Bsf), is an importer or a trader, is a smuggler, or has a local business of premium services (like an expensive restaurant or an electronics shop). Of course, supposing the person is not involved in any illegal or criminal activity.
CENCOEX, SICAD, SIMADI and DolarToday: the Exchange Rates
Venezuela has three official exchange rates.
1. CENCOEX: 6.3 Bsf/$
It is mainly used for importations of first necessity goods, like medicines, food and fertilizers.
2. SICAD: ~13.5 Bsf/$
You can forget about it
The price is generated after an auction. The government used to trade on that rate with people who wanted to leave the country (not anymore). No recent auction has taken place.
3. SIMADI: ~200 Bsf/$ (Sept. 2015)
It is the rate at which authorized banks and exchange centers would trade your $ for Bsf, for example at the airport. This rate will be used if you employ a foreign credit/debit card in the country. Some goods like alcohols seem to be imported on that rate. This rate was recently created to compete with the parallel rate, but which has unfortunately surpassed significantly.
The unofficial rate, also called the parallel rate, the black market rate, or the DolarToday rate, can be found on the website https://dolartoday.com
4. Unofficial rate:
Please note that trading at any unofficial rate or with any unauthorized exchange entity is illegal
This rate is practically the rate at which any unregulated importation or service is sold in the country. Examples: shoes, sports clothes, electronics, restaurants services, apartments. The rate is actually a conversion from the Bsf/COP rate using the COP/$ rate. Bsf/COP is used by smugglers on the Venezuela-Colombia border town of Cucuta, and considering that the COP (Colombian Peso) is freely interchangeable with the $.
1. CENCOEX: 6.3 Bsf/$
It is mainly used for importations of first necessity goods, like medicines, food and fertilizers.
2. SICAD: ~13.5 Bsf/$
You can forget about it
The price is generated after an auction. The government used to trade on that rate with people who wanted to leave the country (not anymore). No recent auction has taken place.
3. SIMADI: ~200 Bsf/$ (Sept. 2015)
It is the rate at which authorized banks and exchange centers would trade your $ for Bsf, for example at the airport. This rate will be used if you employ a foreign credit/debit card in the country. Some goods like alcohols seem to be imported on that rate. This rate was recently created to compete with the parallel rate, but which has unfortunately surpassed significantly.
The unofficial rate, also called the parallel rate, the black market rate, or the DolarToday rate, can be found on the website https://dolartoday.com
4. Unofficial rate:
Please note that trading at any unofficial rate or with any unauthorized exchange entity is illegal
This rate is practically the rate at which any unregulated importation or service is sold in the country. Examples: shoes, sports clothes, electronics, restaurants services, apartments. The rate is actually a conversion from the Bsf/COP rate using the COP/$ rate. Bsf/COP is used by smugglers on the Venezuela-Colombia border town of Cucuta, and considering that the COP (Colombian Peso) is freely interchangeable with the $.
Subscribe to:
Posts (Atom)