700% return on investment? Venezuelan currency scam pays off

By Peter Wilson | Special for USA TODAY

CARACAS, Venezuela — 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. "My travel agent even tried routing me through Colombia or Costa Rica or Panama. And there still wasn't anything."

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 in value, demand for stable currencies like the U.S. 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 U.S. 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% return on investment. It's still a good deal even if the airline charges a typical 25,000 bolivars for flights to the USA or Europe when one is coming from a country where the monthly minimum wage is 2,700 bolivars.

"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.

Many Venezuelans don't even leave the country to take advantage of the scam. They give their credit cards to family members or friends who travel and do the el raspao for them.

"A lot of travelers don't even bother to fly once they have their cards credited with the dollars,'' says Mildred Amaro, who runs Barquero Tours in the central industrial city of La Victoria.

Popular destinations for the swipe are Peru, Ecuador, Panama, the U.S. and Spain, she said.

Venezuela's black market rate has soared in the last year amid political and economic woes brought on in part by socialists policies of deceased president Hugo Chávez. Today's black market rate of 45 compares with a rate of 12 just one year ago before Venezuelan President Nicolas Maduro took over in April.

A weak bolivar and a loss of international reserves has reduced imports and boosted inflation in country that imports 70% of its own food. People are dealing with chronic shortages of milk, toilet paper and cooking oil.

To combat el raspao, the government has been checking travelers at the country's airports against flight manifests before clearing the credit cards for overseas use. The government also plans to install fingerprint machines to crack down on currency travelers.

Few Venezuelans appear chastened by the government crackdown.

"The government created this mess by their mismanagement of the economy," says Molino. "I'm just taking advantage of their ineptitude.''