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Paying top dollar for a black dollar

25 Apr 2022

  • The Sri Lankans buying US dollars informally at sky-high prices
BY Sumudu Chamara For most of us, life in Sri Lanka is gradually becoming a game of survival. Instead of building a better future, the people are coming to terms with the uncomfortable fact that surviving today is the best practical solution, if not the only solution.  People are trying to find ways to earn more money, buy more assets, and reduce living expenses, which in some cases has even resulted in activities such as hoarding essentials and selling them on the black market. It was also noted during the past few months that more and more people are trying to buy lands and gold – assets of which the prices keep increasing.  US dollars are among these assets that more and more people are trying to buy at present, even at an exorbitant price, and they buy it for a multitude of reasons.  During the past few months, on several groups on social media platforms, people started looking to buy US dollars at higher prices. As The Morning observed, those looking were willing to purchase US dollars in large quantities, ranging from $ 1,000 to $ 25,000, and were willing to pay Rs. 350 to Rs. 550 per US dollar. At the same time, there were also many who offered US dollars in such large quantities. To look into this new phenomenon, The Morning spoke to several persons who are looking to buy US dollars. A newer, profitable asset Sarath (name changed on request), a 44-year-old retired engineer, who is attempting to purchase $ 10,000, is of the opinion that the US dollar is gradually becoming a more profitable asset owing to the rapid increase in the value of the US dollar against the Sri Lankan rupee. “The value of the US dollar keeps increasing rapidly, and looking at the way it has happened so far, I think that it is safe to assume that it will keep increasing for years. Those who have US dollars are going to make a massive amount of money if they keep that money without selling. It is also the right time to buy US dollars, even at exorbitant prices.” He opined that the US dollar has become an asset like land, of which the prices always increase and never decrease. “I know that the country’s situation is bad and that the lack of US dollars is one of the major reasons behind the economic crisis. It is indeed an unfortunate situation. However, that opens doors for a lot of opportunities for those who can afford to buy US dollars. They can purchase US dollars and sell them at a later time without any issues, and it can actually be a new business.” When queried about the profit margins Sarath is planning to keep when selling US dollars, he said that he will closely observe the fluctuations in the US dollar rate in the coming few months, and that as soon as the value of the US dollar starts becoming stable compared to the present value or starts reducing, he will sell the US dollars he has purchased. The amount of US dollars he has acquired so far, according to Sarath, is close to $ 14,000, and he has bought them at rates ranging from Rs. 300 to Rs. 430. Given the appreciation of the US dollar, he opined, the US dollar is the best investment one can make. Meanwhile, Chamath (name changed on request), a 29-year-old private sector employee, who also buys US dollars to be sold at a higher price, noted how buying and selling US dollars has become a profitable business. “The value of the US dollar keeps increasing every day. Owing to the Government’s incompetency, the value of the rupee will keep decreasing. The US dollar is like gold – the prices keep increasing, depending on the demand, and at one point, will start decreasing or become stabilised. Providing services and goods to cater to the demand is what a business is, and I do not think that there is anything to be ashamed of in doing so. I am merely purchasing a highly sought-after asset, to be sold at a profit.” He further noted that there is no organised US dollar black market in Sri Lanka, and that those selling and buying US dollars are merely doing it on an individual level. In addition, he said that to stop US dollars from being sold at the individual level, the Government must first stabilise the value of the rupee, and that one of the key ways of doing this is by ensuring that Sri Lankan migrant workers are getting a good price for the US dollars they send back home in remittances.  “The Government lost the migrant workers’ trust months ago, and now, it is difficult to restore that trust,” Chamath further opined. Leaving the country However, not everyone who buys US dollars necessarily intends to sell them at a higher rate later. To some, the US dollar is a form of resource that can be useful when leaving the country. Namal (name changed on request), a 35-year-old private sector employee who purchased around $ 4,300 last month, told The Morning that he buys US dollars, not with the intention of selling them off later, but to migrate to another country when the opportunity arises.  He added: “The country’s situation is getting worse, and the only two ways to survive is either by making a lot of money to survive rising inflation, or by leaving for a country where the economy is strong and stable. With the salary I am getting, which ranges from Rs. 50,000-60,000, it is extremely difficult to survive. The only way to ensure that me and my family have a good future is leaving the country, for which I will need US dollars. If I get the opportunity, I will leave the country. If I cannot leave the country before the economic crisis alleviates, I can always sell the US dollars to a bank or a money exchanger at a profit.” He also described the process of obtaining US dollars from individuals, saying: “I bought $ 3,000 for Rs. 380 per US dollar and $ 1,300 for Rs. 400 per dollar from the black market. It was quite difficult to find, because I did not have contacts. However, there are many who have US dollars and are either selling or collecting such.  “Banks and money exchangers are quite reluctant when we go to buy US dollars, and so the best way is to get in touch with those who have relatives abroad, or those who have been abroad. They have plenty of US dollars. Due to the present situation with regard to the value of the rupee against the US dollar, many are not actually willing to sell dollars unless they have a lot of notes in hand. I had to contact a friend of a friend to get this money. Once I deposited the money to his bank account, the same evening, he delivered the US dollars.” Investments abroad Chandana (name changed on request), a 50-year-old former private sector worker, meanwhile, said that his intention of buying US $ is to invest in a business in a foreign country next year. He told The Morning: “I have a very unique business idea that I cannot reveal. I tried countless times to start that business in Sri Lanka. I have money, resources, and knowledge, and all I wanted was permission from the authorities. But despite my attempts, I did not get the necessary approval. Now, I am trying to migrate to Malaysia, where, according to the information I have, I will be able to successfully start my planned business.  “I cannot reveal how much of an amount in US dollars I have collected, but I have to collect at least $ 15,000 more to start my business there. However, buying US dollars from banks has become difficult, and therefore, I am compelled to seek US dollars from individuals who have the money. So far, I have purchased US dollars from at least 10 persons, who sold them at prices ranging from Rs. 260 to Rs. 480 per dollar.” When questioned about the business of selling US dollars at higher rates unofficially, Chandana said that there is nothing wrong with selling a currency one has, at a price that one thinks is fair. He spoke about the prices of US dollars: “There are plenty of people who buy and sell US dollars. There is nothing wrong with that. Even if that money was exchanged, it is not going to help the country’s economy to a considerable extent.” The root cause of many aspects of the prevailing economic crisis is the foreign reserves crisis, and in that context, a completely new value has been assigned to the US dollar in the domestic market. As some who spoke with The Morning noted, stabilising the rupee is key, and the sale of US dollars at higher prices will continue until the Government takes steps to do that.


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