April 7, 2017 / 4:04 PM / 6 months ago

Venezuelans journey to Colombia for $300 in hard currency

People line up outside a branch of Italcambio currency exchange in San Cristobal, Venezuela March 24, 2017. REUTERS/Carlos Eduardo Ramirez

MARACAIBO/SAN CRISTOBAL, Venezuela (Reuters) - Venezuelan housewife Valentina Uzcategui journeyed to a foreign exchange office in neighboring Colombia last month to buy the equivalent of $300 under a rule that makes her country’s strict exchange controls more flexible for residents living near the border.

What she expected to be a quick and simple process was neither: it took several days, a 400-kilometer (249-mile) car trip and hours waiting in line to collect the Colombian pesos she bought with her Venezuelan bolivars.

“I had to stay overnight in an ugly hotel, because the good ones are expensive,” said Uzcategui, 27, who lives in the western city of Maracaibo. “But I was able to use the money to buy spare parts to fix the car.”

President Nicolas Maduro in January allowed border residents to buy Colombian pesos at an advantageous exchange rate as part of an effort to combat what he describes as “border mafias” that control the currency black market.

Economists, however, say the operations have had no discernable impact on the overall economy and that the country’s strict currency controls are responsible for its crisis.

Introduced by Hugo Chavez, the controls have created severe economic distortions that mean the local bolivar currency is far weaker than the government suggests.

Millions say they are not eating enough because there is little incentive to produce and importers struggle to obtain dollars to bring in goods.

But the measure allows border residents to buy goods that have disappeared from the OPEC nation’s shelves, or to resell the Colombian pesos for a profit of around $180 after paying around $50 in commissions.

Six Venezuelans said in interviews that the operation yielded an exchange rate equivalent to 1,200 bolivars per dollar, compared with the black market rate of roughly 4,400 bolivars - a significant difference.

Sports coach Armando Rivera said he spent almost 24 hours just trying to make an appointment with Italcambio, the only firm authorized by the government for this transaction, via its website.

    “We are trying to survive, we’ll grab anything if it’s almost nothing at all,” he said.

More than 15,000 such transactions have been carried out by Italcambio, its president Carlos Dorado told Reuters last month.

    “We see this operation as a social function. Those $300 allow people to go to Cucuta and buy basic goods,” he said.

Dorado also owns Italbank, which last year started providing a service known as correspondent banking that helps Venezuela’s government maintain links to the global financial system after Citi closed Venezuelan accounts.

Writing by Corina Pons and Brian Ellsworth; Editing by Dan Grebler

Our Standards:The Thomson Reuters Trust Principles.
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