British tourist Matthew Napier (L), 35, and Aiskel Rendon, a 31-year-old Venezuelan, pose for a picture at a beach in the archipelago of Los Roques May 29, 2015. REUTERS/Carlos Garcia Rawlins

By Andrew Cawthorne

LOS ROQUES, Venezuela (Reuters) - Fears of being kidnapped or not finding toilet paper are not much of an incentive for a holiday in Venezuela.

Yet hardy travelers undeterred by the tales - real and exaggerated - of crime and shortages are finding the South American nation an absurdly cheap destination.

That is thanks to exchange controls skewing the economy in favor of anyone with foreign currency, meaning you can hire a boat to a Caribbean island for $15 a day, or trek through Andean mountains or Amazon jungle for a week, with porters, at $125.

A decent hostel at a popular beach may cost $5 a night, while two people can have a three-course meal with wine for $10.

"It's crazy! This beer is costing me just a few pennies," said British tourist Matthew Napier, 35, clad in sunglasses and clutching a local Polar beer on a stunning white-sand beach with his girlfriend at Los Roques archipelago in the Caribbean.

Even at a bumped-up 90 bolivars due to the exclusive island location, a beer here costs just $0.22 (or 15 pence for Britons like Napier) at the black market rate most foreigners change on.

Many are wise to the situation so they look for not so surreptitious money-changers as soon as they land in Venezuela, or make arrangements ahead.

Venezuela's largest denomination note is 100 bolivars - about 25 U.S. cents. Amazed at the sheer quantity of notes they receive, visitors find where to keep them the biggest problem.

"You simply can't carry enough cash with you, that's the main restriction to spending!" added Napier, saying he "felt like a drug-dealer" after wiring money in advance to Panama in order to be given bolivars by a contact in Venezuela.

'RIDICULOUS' PRICES

Despite the currency bonanza, tourists are hardly flocking to Venezuela. There were just under 1 million arrivals last year, four times fewer than neighboring Colombia which is successfully marketing itself despite decades of drug wars and a Marxist insurgency.

In Venezuela, it's the frightening level of crime that mainly puts people off, plus acute shortages of basic products from milk to diapers.

"You're bombarded with this idea you can't go out on the street," said Argentine Juan Suso, 31, who ignored advice at home and in Venezuela to enjoy a few days walking round Caracas before going to Los Roques with a guitar on his back.

"People should come. It's so cheap, it's ridiculous. Even with our devalued currency in Argentina, it still works out such good value," he added, saying meals out in Caracas were a quarter of the cost in Buenos Aires.

The giveaway prices in Venezuela for foreigners are a recent phenomenon: the black market price of a U.S. dollar has shot up nearly six-fold from 70 bolivars to over 400 in the last year.

The government is unable to meet demand at official exchange rates, which range from 6.3 to 200 bolivars per dollar, so the black market satisfies those prepared to pay a hefty premium.

In contrast with tourists, Venezuelans' purchasing power has fallen as wage rises cannot match inflation of 68 percent in 2014 and widely forecast to hit triple digits this year.

Shopping for basic food and goods has become a daily struggle for many locals - let alone the sort of exotic holidays foreigners are enjoying in their country.

"There is no other country in the world in this situation. It's very sad," lamented Napier's Venezuelan girlfriend Aiskel Rendon, 31, a tax analyst who also lives in England.

BACKPACKERS' BONANZA

Not surprisingly, there is a buzz about Venezuela on the backpackers' circuit. Young budget travelers recommend it as one of the world's cheapest spots - and post photos of themselves with huge wads of cash to prove it.

Will Hatton, 26, who runs a blog called "The Broke Backpacker", criss-crossed Venezuela for a month earlier this year, spending about $300 in total as he visited some of its most exotic places like the table-topped Roraima mountain.

Changing money on dodgy corners, and once counting hundreds of bills in a bathroom, Hatton's spending included three internal flights and two guided trekking tours for his $300.

"You pay $1 and you get a really nice meal. If you shell out $20, you're paragliding in the morning and kayaking in the afternoon!" said Hatton, who recounted his Venezuela experiences at thebrokebackpacker.com.

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