Exchange houses and fluctuation of rates

Quite a bit of discussion about official rates on the board, but has anyone noticed the fluctuation of the spread between the exchange houses and the official? I noticed last year around September, the exchange houses were selling dollars at about a 10% discount to the official rate. Until about a month ago this spread changed to only .5% off the official. Now, it has lengthened to 2.5%.

rate last september: 2100/$
houses selling dollars for 1890

rate today: 1752
houses selling for 1710

Any ideas what is causing this to happen. Obviously, the houses have more dollars than they can sell at the official rate so they are forced to offer a better rate, but what causes the oversupply?

By jh816 on May 2, 2008, 14:11 in Friendly Talkzone.

joeylove007 says on May 2, 2008, 17:39:

Sounds more like they are speculating the the dollar will gain instead of drop. The FTA is blocked by the House Democarts. This may push the dollar back up, at least against the peso.

Trust no one...except God. Hope to retire in Colombia

Mr. Hollywood says on May 2, 2008, 19:17:

I have an idea about what causes the oversupply.

Think about giant waves of cash dollars washing back into Colombia from its famous illicit trades.

jh816 says on May 2, 2008, 20:09:

If they were speculating, it would be speculating for a dollar drop. They are selling at less than the official rate which would mean they are trying to get rid of the dollars before the value drops further.

Washing the money is the big function of the cash houses. Most don't even ask for your passport or cedula, no paper trail. The "big remittance" idea is the only thing I've been able to imagine also. Makes ya wonder what the spread was in the glory days of Escobar and company. Bet you could have made a good 20% off the exchange.

Mr. Hollywood says on May 3, 2008, 07:30:

When the paracos were about to demobilize there were places in Colombia where cash dollars were being sold at about a 50% discount. Of course, you really had to go into the dragon's lair to get that rate.