How do they arise and disappear? What form do they take? What determines black market premia for hard currency and how can such information be used by investors? Many economic studies are based on official rates that were fixed and chronically overvalued. This data can be used to make observations about the nature of currency black markets. But Winton’s databases include unique records of monthly black market rates from 1947 to 1993 for around 100 currencies, from the Albanian Lek to the Zambian Kwacha, along with unofficial gold prices for a selection of global cities. In situations such as these, black market rates often provide a more accurate reflection of a country’s economic circumstances than official exchange rates.īecause of its nature, data on the black market is hard to source. In Venezuela, where rampant inflation has left the national currency unable to hold its value, millions of consumers and businesses have been using black market US dollars to buy essentials. Black markets conjure up images of shady characters in dark alleys with suitcases of dollars.Īlthough such activity exists, illegal currency transactions have often been conducted openly by otherwise law-abiding citizens.
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