Dollar Daze Tests Currency Reform

Gold cordobas are the future, but greenback is king in Nicaragua - a letter from Managua

EVER since an airport cabby in Fiji threw a nationalistic fit because I didn't have any Fijian currency for the fare, I've always been careful to swap US dollars as soon as possible for local lucre. But in Nicaragua that could be a mistake.

On a recent Sunday evening, I went out for a newspaper with a pocket full of Nicaraguan c'ordobas. But I couldn't spend them.

``Look, the exchange rate is 2 million c'ordobas to one dollar, right? I'll give you 3 million?,'' I said, pleading with the sales clerk. I was trying to pay for a Sunday newspaper. But the clerk wasn't budging: No US dollars, no paper.

Pulling out my wad of c'ordobas equal to about $50, I tried logic: ``This is Nicaraguan currency? And this is Nicaragua? This is where Daniel Ortega and his band of Sandinista revolutionaries spent a decade creating a `new order' while the United States did its best to prevent it?''

``Supposedly,'' came the indifferent reply.

But in a country where the Soviet-made Lada automobile is almost as common as the Toyota, and where Vladimir Lenin's writings are still sold in the grocery stores (60 cents per pamphlet), the US greenback is king.

Resignedly, I walk over to the front desk of the best hotel in Managua to exchange the c'ordobas. But the cashier at the Inter-Continental was no help. ``I can't change your c'ordobas. We only have dollars here,'' she said pointing to a sign stating that, by law, all foreigners must pay for their rooms with dollars, cash only.

Subdued but not defeated, I went outside to test the black market. There had been men by the road, waving wads of bills at passing cars when I had arrived. But they had disappeared into the night. I asked a bent and wrinkled woman hawking cigarettes and lollipops under a tree for help. She whistled for the black marketeers. ``Ramon!'' Pause. ``Sorry mister, they've all gone.''

Asking around during the next few days, I discover Nicaragua has had ``dollar stores'' for years. The Sandinistas actually encouraged their proliferation as a way of acquiring foreign hard currency for the cash-starved economy. Most hotels here require payment in dollars and do not accept any type of credit card. Until recently, all visitors were required to exchange $60 (at a less than advantageous rate) upon entering the country.

To make Nicaraguan markets even more confusing, the country is in a monetary transition with three currencies in use.

I made the mistake of carrying c'ordobas chancherros, which roughly means ``worthless'' or ``swinish.'' This is the old currency due to be phased out this year. Yet, for now, it is the currency most people use in the markets and, yes, for taxis.

But the old c'ordoba has taken a beating with countless devaluations. Rather than retire the practically worthless 1,000 c'ordoba bill, the original value is obscured with daubs of black ink. The government simply stamps the middle with a new value, which in an example I held became ``1,000,000.''

To break the psychology of hyperinflation that has hit 36,000 percent in years past, the government has been slowly rolling out a new and improved c'ordoba. The ``c'ordoba oro'' or gold c'ordoba is equal to one US dollar. And the government is backing it on a one-to-one basis with US dollar reserves.

Billboards herald: ``Gold C'ordoba - to build the future.'' Menus in restaurants and prices in supermarkets are given in the new c'ordoba. But there seems to be resistance or outright distrust of the new standard. ``If I'm not earning gold, I won't pay gold,'' says graffiti scrawled on one building.

Mar'ia, a government employee, says that what little she earns each week is paid in c'ordoba gold. ``Could I see one?'' Bemused, she answers: ``We don't keep them,'' she says, including the other office workers. ``We go straight to the bank and change them for dollars.'' Of course.

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