The foreign currency situation in Bolivia has evolvedover the last year or so.
In 2006, US$1 fetched as much as Bs.8.10. Since then the rate has been dropping steadily and now stands at Bs.7.58, with the likelihood that it will continue to drop over the next few weeks at least.
It was totally unheard of before this for Bolivian currency to appreciate against the dollar, and lots of people wonder how long it can last.
The euro, on the other hand, has appreciated slightly over the same period.
The situation is the result partly of the international currency markets, partly of a favourable balance of payments for Bolivia, and partly of deliberate policy of the Central Bank to appreciate the national currency and “de-dollarize” the economy. The policy did begin in a low key under the previous administration, but has become more noticeable under the Morales government and there may be an ideological element involved.
Whether or not it is the right policy, it seems to be working. More and more often, prices are quoted in Bs. only, and some businesses seem less eager to receive dollars. This is probably not so much the case in the tourist haunts, although I haven´t been to many recently, and you can still draw dollars from the ATMs. In fact, if you have a cash card for a dollar account, the rate is marginally better if you withdraw dollars from the ATM and then exchange them in one of the recognized exchange houses, than if you withdraw Bs. directly from the ATM.
The euro is rather steady, while the US dollar is fluctuating and has become weak compared with other dominant currencies.
Over the last 200 days 1 dollar US $ has fallen from 0.749 euro to 0.689 euro. (Interbank rate, Daily average). (Lowest 11/24/2007: 0.673. Highest 06/14/2007: 0.752).
I guess the change in the rate of exchange from US $ to Bolivianos tells more about US than about Bolivia.
Yeah for what it's worth from one American, I'm afraid the dollar is headed for the toilet. We Americans are WAY over extended. Middle class is seeing this in their decreased buying power here even with millions of cheap China knockoffs being imported, this obviously also a sore spot with our deficit spending and job loss. I won't bother going down that accountability road rhetoric with government and big business. I'm afraid as proud Americans we will keep spending with our heads in the sand until China dumps our dollars and buys Euros. Then I'm afraid even travel in Bolivia will be expensive for us Americans.
A little more about the world economy: Next to the fact that the oil exporting countries are getting much richer and have gained big influence at investments and finance, the growing economies of China, India and some other countries - including some South American countries - are changing the balance, and the 'old' economically dominant countries are relatively losing power. But as regards to the weak and falling US dollar the main causes are to be found inside the US.
In all it has become more easy for Bolivia and neighbouring countries to loosen their dependence of the US $.
Update about the rate of exchange, October 2008:
I have written about the developments of the exchange rate from US $ to Euro and from US $ to Boliviano up to now (09-Oct-2008) in a post in the thread "Parque Nacional Madidi-no tours...possible?", 09-Oct-2008.
In one and a half year, from the end of May 2007 to now (11-Oct-2008) the value of the US $ compared with the Boliviano has fallen with 14 %:
From rate of exchange 1 US $ = 8.3 Boliviano to rate 1 US $ = 7.17 Boliviano.
(Interbank rate, according to 'FXHistory' at http://www.oanda.com)
Link to the post.
Or follow the TT tag Bolivianos:
http://www.lonelyplanet.com/thorntree/tags/Bolivianos
Rate as of this morning is 7.02. As Threeshire mentions above, I believe this is driven by ideology more than anything.
Curious that over the past week or so, several "strong" currencies like the Australian dollar have taken a pummelling against the USD, but the little old Boliviano is holding its own!
trusted partner
