Caracas Chronicles

Photo: iStockPhoto, retrieved

I keep hearing it, on Twitter, on WhatsApp, in calls with distraught would-be dollar buyers, all over the place.

“I miss DolarToday.”

The demise of the once-dominant price site for the parallel dollar left Venezuelans disoriented. DolarToday created the illusion of transparency — the fleeting sense that there was some knowable number of bolivars a dollar was worth. It was always, of course, subject to manipulation but in a rough, approximative kind of way, it did the trick: DolarToday was a marker, a place to start any given negotiation on any on-the-side forex trade.

Some months ago, it stopped working. The gap between the real black market exchange rate and the numbers in the iconic white-on-green screen started to become too obvious to ignore. When it became clear the gap would persist, confidence in DolarToday collapsed and black market dollar traders abandoned it en masse. The DolarToday era is over.

In its place, a cacophony of new sites: over half a dozen black market exchange rates, Venezuelans feel that buying/selling dollars is closer to walking over a tightrope while blindfolded.

But what happened? Why did the bottom fall out of our confidence in DT?

There have been many rumors about shady operators buying the site to manipulate it. Maybe the government really believed their own story about how a single website run by a guy at a HomeDepot in Alabama had magical powers to rearrange the economic decision-making of millions of Venezuelans. Maybe they believed it so much one of them finally had a revelation, made the Alabama HomeDepoter a proverbial “offer he couldn’t refuse”, bought the site and started messing with it as a way of trying to slow the bolivar’s depreciation.

What the market really misses about DolarToday is having a single exchange rate that everyone accepts, no questions asked.

If so, they’re now learning a lesson that should’ve been too obvious to ever need teaching: prices track supply and demand, not the arbitrary whim of hardware salesmen. Blaming DolarToday for economic instability was, at best, a confession of economic illiteracy. People who genuinely believe the thermometer is to blame for the fever ought never to have been allowed to set economic policy for an entire nation.

Of course, we can’t know for sure if the government bought up DolarToday. It could have been someone else: a canny player seeking to manipulate dollar prices on the margin long enough to make a killing. It’s impossible to tell — and impossible to find out how big a profit such a buyer may have made before pushing his luck too far and killing the goose that lay the greenback egg.

In reality, though, the smell of scam had attached itself to DolarToday for many years before it stopped working. Why does the market miss it?

It doesn’t miss it, of course, with it’s absurd, screeching headlines and garishly mismanaged graphics. What it misses is having a single exchange rate that everyone accepts, no questions asked.

With no widely trusted reference price out there, dollar sellers and buyers are now forced to haggle every single time. That takes time, it causes stress and uncertainty and, ultimately, costs money. Black markets are always inefficient: without a single, agreed-upon price, they’re worse.

None of this is necessary. There’s never been a good reason why consenting adults shouldn’t be allowed to trade currencies with one another openly, in a transparent marketplace with prices visible to everyone. The government’s refusal to allow this has caused a million everyday absurdities in Venezuela, and continues to cause new ones every single day.