Foreign exchange in Peru

Most people don’t spend a lot of time thinking about exchange rates, unless they have to for some reason, such as making significant foreign purchases, or living in a collapsing economy. I’ve kept an eye out whenever passing through airports recently, to see how predatory the local rates are. Nowhere seems to be as horrific as Gatwick, where the spread on GBPEUR was something like 0.98/1.35 last August.

Peru seems to have achieved the impossible: reasonably stable exchange rates, lots of places to change money, and razor-thin spreads. All the way from Puno to Piura, every reasonably-sized town had a bureau de change every few streets in the middle of town. Most of them quoted something in the region of 3.32/3.34 for the US dollar, with the worst spread only around five cents. Euro spreads were a bit wider, but not shockingly so.

There were always half a dozen people outside our local supermarket in Lima, wearing turquoise waistcoats and brandishing bricks of banknotes. Cars would pull over, and money would change hands after a few seconds’ bargaining. This mostly seemed to be people selling US dollars for soles, but I can’t figure out quite why. Most ATMs in Peru give you the option of taking out USD or PEN - is this because people still remember when the old sol went through the floor and was replaced by the inti in 1985 (1,000 PES = 1 PEI) and then again in 1991 by the new sol (1,000,000 PEI = 1 PEN), even though things have been pretty stable ever since? Or perhaps because a lot of Peru is still a cash-based economy and it’s hard to take out more than a few hundred soles from the bank at once, so Benjamins under the mattress are a good store of value?

A word to the wise. Change your money in Peru if you can, and definitely don’t cross the border to Ecuador with more than pocket change left in soles, because it will be difficult and expensive to change. Peruvian money changers will happily give you $50 and $100 notes, but, despite being legal currency, nobody likes them in Ecuador and even big businesses may refuse to take them.