The
Why Do Currency Black Markets Exist?
- Weak economic fundamentals, such as a high rate of inflation and limited foreign exchange reserves.
- Strict currency controls that limit the amount of foreign currency available to residents.
- A fixed exchange rate regime where the domestic currency is pegged at an unrealistically high exchange rate to the U.S. dollar or another global currency.
- A lack of confidence among the citizenry in the value of the domestic currency.
Where Is It Becoming Prevalent?
Egypt
because of political instability and violent protests
Iran
Argentina
Venezuela
The Bottom Line