Dublin Rickshaw driver beats Caracas currency market

In Dublin, a 31-year-old bicycle rickshaw driver is in the cross hairs of the Venezuelan government for black market currency trading.

The driver said he’s a former television producer who last year joined the ranks of Venezuelans moving to the Irish capital.

For some, the draw wasn’t just the chance to study English in the city of James Joyce and Roddy Doyle: it was a chance to obtain work visas and supplement their income by selling euro on the black market 4,400 miles away in Caracas, even at the risk of jail for breaking Venezuelan currency laws.

Preparing for another 10pm to 6 am weekend shift ferrying passengers across the city, the driver said he sold euro for bolivars three times on the black market back home, with €300 the most at one time.

He asked that he not be identified to protect his identity after Venezuela cut off funds to students in Ireland and threatened to imprison students guilty of currency fraud for as long as seven years.

This month, Irish authorities laid out a plan to combat abuses in English language schools acting as “visa factories” after Venezuela’s government said the real purpose of some schools was to allow students work.

As President Nicolas Maduro’s administration faces a shortage of foreign currency and upcoming bond repayments, it also suspected that students were taking advantage of a complex system of exchange rates that sold them euro at a preferential rate for educational purposes.

Under that system, students could buy the currency for about for 8.1 bolivars per euro.

The students could then sell the euro, together with any cash earned by working in Dublin, back on the illegal black market, where a euro currently fetches more than ten times the official rate.

The South American country has maintained strict currency controls introduced by former President Hugo Chavez since 2003.

Under the system, importers of food and medicine and students studying authorized subjects abroad could buy dollars at the official rate of 6.3 bolivars.

On the black market, one dollar currently buys about 97 bolivars and a euro fetches 124, according to dolartoday.com, a website that tracks the rate at the Colombian border.

The bolivar has lost 58 per cent of its value on the black market in the past year. Students moving abroad could apply for school fees, medical insurance and about €1,300 a month for maintenance.

Students said they could sell the euros at the black market rate through online trading sites or when traveling home.

The number of Venezuelans registering to live in Ireland rose to 2,413 in 2013 from 274 in 2008.

Suspicious that students were in Ireland mainly to work, and playing the black market, Venezuela began tapering off euros to the students earlier this year, before blocking all transfers in June.

Around the same time, the former television producer started working as a rickshaw driver, he said in an interview in a cafe just off Grafton Street, a busy city center area teeming with bars and stores. Students who could find work stayed, while others left, he said.

The students said they have been impoverished by the government’s decision to cut off euros. Venezuela’s embassy in London, which covers Ireland, didn’t reply to e-mail or phone requests for comment.

The system “will return at some stage,” said Tiago Mascarenhas, marketing director at Seda College, a bustling English-language school in Dublin.

“They will look for a better process. This is just the way it happens in Venezuela - everything changes.”

In 2013, 617 Venezuelans enrolled in Seda, rising from seven three years earlier. Now, the number of new students from Venezuela has dropped to almost zero, Mascarenhas said. He said Seda ensures students abide by government rules, including a requirement that they attend at least 80 percent of classes. Students say they chose Ireland for a number of reasons. First, studying in Dublin is cheaper than London, for example.

Second, until June, Venezuelan students coming to Dublin didn’t need a visa before arriving. Once in Ireland, they applied for a visa, allowing them to work 20 hours a week while studying and 40 hours a week when courses finish. Venezuelans could take cash earned by working in Dublin, add them to those provided by the state, and sell them on the black market.

Bloomberg