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Black market exchange:

In some countries the official exchange rate is fixed at a completely unreasonable or unrealistic rate, eg. Zimbabwe's 55 Zim dollars to 1 US dollar. In these countries the black market will provide much more realistic evaluation of the currency's worth, in Zimbabwe's case around 1500:1 (as of 2005), and is practically unavoidable.

That said, the risks of black market exchange are legion. First and foremost, black market exchange is illegal and both buyer and seller may face severe sanctions if caught: the seller may even be (or work with, or tip off) a police officer out to trap tourists. Second, the risk of fraud is high: you may get obsolete banknotes, fake banknotes, less than the promised amount or nothing at all. Consider carefully whether you need to exchange in the first place, as businesses in countries with basketcase currencies will often be more than happy to accept hard currency directly instead (although this, too, will often be illegal), and you may get all the local currency you need back as change.

The key guideline to successful black market transactions is to receive the money before you hand yours over. Count the bills, inspect the bills carefully, compare them to any you already have, and only then surrender your own money to the vendor. Do not allow them to take back the money they gave you, as this is where various sleight-of-hand tricks can be pulled to replace the legitimate bundle with something entirely different.

In countries where foreign exchange rates are reasonable, it is best to avoid the black market entirely: you risk losing all your money for gain of a few percent at most.

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