Problem

Currency black market

Incidence:

In the face of the chronic shortage of foreign exchange in some countries, the currency black market becomes a thriving business sector. Companies are forced to resort to illegal methods to obtain the dollars needed to maintain their operations. Those businesses which manage to earn some foreign exchange 'salt' it away abroad for fear of a freeze on foreign currency accounts. This has become extensive in certain countries such as the Philippines. With the flow of fresh foreign loans and investments reduced to a trickle and the ensuing strict trade and exchange controls, only companies involved in priority industries, such as importers of oil and food and manufacturers for export, have access to legal dollars. For non-priority companies, about the only source of dollars for imports is the black market. Another example is China, where there is a flourishing foreign currency black market and speculative trading in scarce products. There is a small but lucrative black market operating in actual foreign currencies, especially US and Hong Kong dollars. Some official organizations may also have been involved in currency trading and speculation, using money obtained through Bank of China loans.

 

Broader Problems:
Underground economy
Narrower Problems:
Reliance on cash exchange
Problem Type:
D: Detailed problems
Related UN Sustainable Development Goals:
GOAL 10: Reduced Inequality
Date of last update
22.05.2019 – 16:16 CEST