Colombia's black market in foreign exchange

Grosse, Robert

doi:10.1016/0305-750x(92)90010-s

Cited by 10 publications

(2 citation statements)

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“…As in other countries where black market exchange rate studies have been undertaken [e.g., Aggarwal, 1990;Culbertson, 1989;Grosse, 1992;Koveos and Siefert, 1985], the broad driving forces that determined the black market exchange rate during the 1980s were expected to be differences in inflation between Jamaica and the United States and the supply of US dollars into this market from major export activities. Other factors such as the interest rate differential and the possibility of arbitrage between the black and official markets were postulated as important determinants; however, their insignificance in models of the black markets in other countries left doubt about their importance in Jamaica.…”

Section: Determination Of the Exchange Ratementioning

confidence: 99%

“…While the main locations for cross-border movements of funds were just the two main cities (Kingston and Montego Bay), nevertheless the number of dealers in large transactions was much larger than in South American countries that have been studied [e.g., Grosse, 1992;Cottely, 1990]. This may be due to the diffuse nature of the Jamaican market, or perhaps to the ease of operating between Jamaica and financial centers such as Miami, Grand Cayman, and Panama, all of which lie within one-and-ahalf hours of air travel and simple ocean travel as well.…”

Section: Distinguishing Features Of Jamaica's Black Marketmentioning

confidence: 99%

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Jamaica's foreign exchange black market

Grosse

1994

Journal of Development Studies

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As in many other less developed nations, the imposition of foreign exchange controls promoted the growth of a foreign exchange black market in Jamaica. This article explains the structure and functioning of the market in recent years. Under controls initially imposed in 1954, this market grew to about US$1.7 billion of transaction value per year by 1990. During the 1980s the main participants in the market seeking to buy foreign exchange were Jamaican importers and savers who either were restricted from obtaining foreign exchange in the official market or chose to evade taxes and other rules by using the black market. On the supply side were Jamaican expatriates living abroad, foreign tourists, ganja exporters, and traders using false invoices. Thousands of black market exchangers provided the marketmaking service, sometimes adding the service of funds transfer overseas. A black market exchange rate model supported this interview-based, institutional description of the market. The foreign exchange black market contributed importantly to the operation of Jamaica's underground economy during the 1980s. The liberalising of the foreign exchange market and elimination of capital controls in 1991-2 undermined the economic logic favouring black markets. These changes may induce the transfer of a large part of previously underground financial activities into the legally-recorded economy.

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Section: Determination Of the Exchange Ratementioning

confidence: 99%

Section: Distinguishing Features Of Jamaica's Black Marketmentioning

confidence: 99%