WILLEMSTAD, Curacao – Flights from Venezuela to nearby countries are packed with travelers clutching credit cards and looking to make fast bucks under rules resident Hugo Chavez introduced to prevent capital flight.
The Caribbean island of Curacao, which lies off the coast of Venezuela, is a favorite spot for Venezuelans on lightning tours to make juicy profits buying dollars at a cheap fixed exchange rate. They double their money selling the greenbacks at home on a legal parallel market.
Dubbed currency tourists, they rush off planes and straight to cash machines in the sunny former Dutch colony of 300,000 residents. Flights to Curacao and other favorite destinations Aruba and Panama are often fully booked months in advance.
“We bought our tickets two months ago, everything is full because of currency controls. When the parallel rate goes up everyone travels,” said Caracas resident Lino Olivero, 30, in a Panama City cafe that offers Venezuelan food and television.
Venezuelan law allows citizens to purchase up to $5,600 dollars a year for travel purposes at the cheap fixed rate. But demand for dollars is high, and they can be traded on a thriving, legal parallel market at a much higher price.
Travelers can withdraw $500 per month from overseas cash machines, and pick up the rest for a healthy commission through merchants who make fictitious transactions — letting Venezuelans resell the dollars or put them in savings.
Curacao’s stores are filled with shoppers swiping handfuls of cards in exchange for dollars.
Business is so good for card-swiping merchants that one entrepreneur said he was able to buy apartments to house currency tourists and SUVs to shuttle them around.
Venezuela has enjoyed a long economic boom and has not yet felt the impact of the world economic slowdown or the recent collapse in oil prices, so shopping-mad Venezuelans are still spending fast and jetting around the Caribbean to cash in on the exchange rate distortions. They often use the quotas of friends and relatives to increase the bonanza.
Chavez created the currency system in 2003 after a short-lived coup and a shutdown of the oil industry by his political opponents raised fears of massive capital flight.
The bolivar currency is officially fixed at 2.15 to the dollar but the rate is closer to 5 on the parallel market, designed for some limited transactions but now a large market that effectively sets the exchange rate for much of the economy.
The travel quotas weigh on Venezuela’s foreign reserves. Up to November this year the government released $4.4 billion for travel. The central bank’s total foreign currency reserves fell 4 percent in November to $39 billion.
Venezuelans who are sufficiently well-heeled to hold credit cards and buy airline tickets enjoy pointing out that the socialist Chavez, who has promised to end global capitalism, is subsidizing the rich, but few complain about the quick cash.
“People say Chavez is bad, but Venezuelans never used to travel anywhere — look at them now, they’re all over the place,” said Victor, a taxi driver in Panama City who earns extra money from the currency travelers.
Stores in Curacao’s capital of Willemstad fill up on weekends with Venezuelan shoppers largely oblivious to the legendary scuba diving and quaint Dutch architecture that draw tourists from around the world.
They stock up on appliances, clothes and perfume that can be resold at a profit in Venezuela where prices are higher, or use newly acquired dollars to open offshore bank accounts — often with bags in hand because they don’t stay overnight.
Curacao’s currency merchants crowd the Willemstad airport where most days lines of Venezuelan tourists empty three cash machines of dollars.
With little success, Venezuela’s currency board has tried to stem the business by cross-checking purchase records with airport immigration logs.
Rumors that the government will devalue the official rate or cut the dollar allotments have fueled the rush to spend travel quotas.
Venezuelans of all political stripes try to accumulate dollars because the inflation rate of 27.6 percent — the highest in Latin America — is about twice the going interest rate, meaning local savings rapidly lose value.
“I’m socialist and a Chavez supporter, but I have a right to use my dollars. They belong to the nation, not the government,” said one government worker who asked not to be identified.