Bolivian Currency: Banks Refuse To Exchange Notes

Bolivia is not as advanced as most countries when it comes to banking, payments, and currency exchange, and this can cause frustration for travellers. The official currency of Bolivia is the Bolivian Boliviano (BOB), and it can be difficult to obtain this currency outside of Bolivia. While it is possible to exchange US dollars for bolivianos at Casa de Cambios (money exchange companies/ bureaux de change), banks in Bolivia will not offer a favourable exchange rate.

Poor exchange rates

Banks may not exchange Bolivian currency due to poor exchange rates. The Bolivian economy is facing a currency crisis, with dwindling foreign reserves and fears of devaluation. This has resulted in a scarcity of US dollars, which are typically used for international transactions. The limited availability of dollars has led to the emergence of a parallel dollar market, where the value of a dollar is higher than its official exchange rate.

The Bolivian Boliviano (BOB) is the official currency of Bolivia and is issued by the Central Bank of Bolivia. The exchange rate of the Boliviano to the US dollar has remained relatively stable, with 1 USD worth around 6.9 BOB. However, it is challenging to obtain Bolivianos outside of Bolivia, and the exchange rates offered are often unfavourable. Obtaining Bolivian currency in advance, especially in neighbouring countries like Peru or Argentina, is extremely difficult and usually results in poor rates.

When exchanging currencies in Bolivia, it is advisable to avoid airport exchanges and the black market to obtain better rates. Additionally, bringing new and crisp US dollar bills can result in higher exchange rates or lower fees. It is also recommended to carry smaller denomination US dollar notes, as they provide more flexibility and are accepted in many places, although not always at great rates.

While Bolivia has a network of ATMs that accommodate international cards, the withdrawal limits per transaction can be as low as Bs 500 (approximately $73). ATM fees vary, with some brands charging no fees at all, while others can go as high as Bs 69.67 (about $9.95) per transaction. It is essential to use fee-free ATMs and avoid dynamic currency conversion during transactions to minimise costs.

Lack of currency popularity

The Bolivian Boliviano is not a popular currency. It is extremely difficult to get hold of the currency outside of Bolivia, and even in neighbouring countries such as Peru or Argentina, it is usually only available in areas close to the border and the rates are poor.

The best option for travellers is to bring US dollars to exchange, as this is the only foreign currency that is widely accepted and easily exchanged. Other currencies, such as Canadian dollars, Australian dollars, UK pounds, and euros, are going to be extremely difficult, if not impossible, to exchange, and if you do find a way to exchange them, the rate will be terrible.

It is also worth noting that even within Bolivia, US dollars are accepted in many places, including shopping markets, tour operators, and some hotels and hostels. Therefore, it is recommended to bring new, pristine US dollar notes in small denominations to ensure maximum flexibility when exchanging or paying directly in USD.

Additionally, it is important to be cautious when exchanging currency in Bolivia. Avoid exchanging money at airports, hotels, or black markets, as these places often have unfavourable rates or scams. It is better to use authorised currency exchange centres in touristy areas or banks to convert your currency into Bolivianos.

Dynamic currency conversion

DCC is particularly useful when travelling in a foreign country, where a merchant may offer the option to pay in your home currency, including the exchange rate and any additional fees. Similarly, when withdrawing local currency from an ATM, DCC means you can be billed in your home currency.

DCC provides cardholders with a convenient and immediate understanding of transaction costs in their home currency. However, this convenience may come at a higher cost due to exchange rate markups and fees. For example, a 2017 study from the European Consumer Organization found that customers using DCC in Europe paid between 2.6% and 12% more. As such, customers are often advised to opt out of DCC.

DCC is optional, and cardholders have the right to decline it. If a cardholder declines DCC, the transaction is processed in the local currency, and the cardholder's bank will convert it using the bank's exchange rate.

DCC fees are levied by the merchant, usually through a service provider, and are typically higher than those charged on regular credit card transactions. The exchange rates offered by DCC often include a markup over the daily bank exchange rate, which can make the transaction very expensive.

Poor condition of notes

Banks will not exchange Bolivian currency due to the poor condition of notes. This is because the notes are often filthy and in a state of disrepair, which can make them a health hazard. The poor condition of the notes also makes it difficult for individuals to identify fake notes, as it is harder to spot the subtle differences between real and counterfeit notes when the quality of the genuine notes is already poor.

The poor condition of the notes can also be attributed to the fact that Bolivia is not as advanced as other countries in terms of banking, payments, and currency exchange. This lack of advancement has led to a situation where individuals are unable to obtain crisp, new notes, which are preferred by banks for exchange. Additionally, the lack of advancement in the banking system may contribute to the lack of regulation and enforcement of standards for the condition of currency.

Furthermore, the poor condition of the notes may be a result of the high inflation rates in Bolivia, which can lead to individuals hoarding cash and engaging in barter trades to preserve their purchasing power. This can result in notes being circulated more frequently and for longer periods, leading to increased wear and tear.

To address the issue of poor note conditions, the Bolivian government has started releasing new versions of the notes, which are more durable and have additional security features. These new notes are expected to improve the overall condition of the currency and make it easier for individuals to identify fake notes. However, it will take time for the new notes to fully circulate and replace the old ones, and the issue of poor note conditions may persist in the short term.

Individuals travelling to Bolivia are advised to bring new and crisp notes if they plan to exchange currency, as banks and money changers may refuse to accept notes that are in poor condition. It is also recommended to bring small denomination notes, as larger bills are often preferred and can yield better exchange rates.

Limited access to foreign currency

Bolivia's balance of payments crisis has led to dwindling reserves of foreign currency, which has resulted in limited access to foreign currency for its residents. This crisis has been caused by the erosion of natural gas production and exports over the past 20 years. As a result, the country's Central Bank has been selling foreign currency to defend the value of its domestic currency, the boliviano.

The scarcity of dollars has led to a scarcity of essential goods such as medications, medical supplies, and equipment for farming and mining. The government's response to this crisis has been to further limit access to foreign currency, which has, in turn, led to the emergence of unofficial currency exchanges where the value of a dollar is much higher than its official rate.

The Bolivian boliviano is not a popular currency internationally, and it is extremely difficult to obtain it outside of Bolivia. Even in neighbouring countries such as Peru or Argentina, it is usually only available in areas close to the border and the exchange rates are unfavourable. As such, it is recommended to carry US dollars when travelling to Bolivia and exchange them for bolivianos upon arrival.

US dollars are widely accepted in Bolivia, especially in tourist areas, and can be exchanged at banks, currency exchange centres, and "Casas de Cambio" (money exchange companies/bureau de change). However, it is important to note that only new and undamaged notes are accepted for exchange. Additionally, the exchange rates offered by banks are typically lower than those offered by Casas de Cambio.

Frequently asked questions