Venezuela is introducing an exchange rate for tourists, fueling speculation the government will devalue its currency for the second time in a year.
Foreign visitors to the South American country will be able to sell as much as $10,000 a year at an exchange rate to be published on the central bank’s website, according to a decree in the official gazette distributed today.
Venezuela, which devalued the bolivar by 32 percent in February to 6.3 per dollar, has been unable to arrest the decline of the bolivar on the black market, where companies and individuals unable to access the official rate pay as much as 57 bolivars per dollar. President Nicolas Maduro this month re-started dollar auctions at an undisclosed rate in an effort to stem product shortages in time for Christmas as annual inflation reached almost 50 percent in September.
“Every time they announce a new exchange rate for a sector, it’s a devaluation for that segment,” Barclays Plc analyst Alejandro Grisanti said today in a telephone interview. “In theory, tourists had been using the official rate until now.”
An official at Venezuela’s central bank, who asked not to be identified because she isn’t allowed to speak publicly, said she wasn’t able to comment when asked when the bank would publish the tourist rate.
The bolivar has lost almost 70 percent of its value on the black market so far this year, according to rate tracking website dolartoday.com. Maduro has blamed inflation, product shortages and the record gap between the official and black market rates on “economic sabotage” by political opponents.
Non-residents, who will be able to purchase bolivars at the tourist rate at banks in airports and ports, will be able to sell as much as 25 percent of the bolivars they purchased back to central bank upon departing the country, according to the gazette. Foreign credit cards swiped in the country will use the tourist exchange rate.
“No tourist who is moderately informed is going to exchange at an official rate below the black market rate,” Asdrubal Oliveros, director of Caracas-based consultancy Ecoanalitica, said today in a telephone interview.
The yield on the Venezuelan government’s benchmark 9.25 percent dollar bonds due in 2027 rose three basis points, or 0.03 percentage point, to 11.91 percent today in New York, according to data compiled by Bloomberg. The price fell 0.18 cent to 82.16 cents.
Former President Hugo Chavez, who died from an undisclosed type of cancer in March, devalued the bolivar in December 2010 by unifying two fixed foreign exchange rates that had been used in a multi-tier system introduced in January that year.
“The measure shows that the government is going back to a multiple exchange rate system,” Oliveros said about the rate for tourists.
Venezuela has no plans to end currency controls, Maduro said on Oct. 24. The government is working on reforms to its official currency system known as Cadivi and the introduction of a new, alternative system, Oil Minister and Economy Vice President Rafael Ramirez said Oct. 23.
“The government will at least sell dollars to tourists at the rate used on the Sicad, otherwise it wouldn’t make sense to publish this resolution,” Jose Guerra, an economist at Universidad Central de Venezuela, said today in a telephone interview, referring to the complementary dollar-auction system introduced this year that doesn’t publish exchange rates.
Venezuela will probably devalue the bolivar after municipal elections on Dec. 8 with large depreciation of the official Cadivi rate and new rate tiers, Bank of America economist Francisco Rodriguez said in a note to clients on Oct. 17.
Minister Ramirez said on Oct. 18 that the country had no plans to devalue the bolivar.
“Those who are waiting for us to announce another devaluation are wasting their time,” he said.
Venezuela’s international reserves have dropped to $22.1 billion, the lowest level in almost nine years, according to data compiled by Bloomberg.
Maduro requested special powers from the National Assembly Oct. 8 to fight inflation, shortages and corruption. In a speech to the assembly, the former bus driver asked lawmakers for the right to govern by decree for 12 months, while accusing businesses of “waging economic war” by hoarding goods and speculating on foreign exchange controls.
“Although this is a rate for tourists, Venezuelans will consider this an official rate and use it as a reference,” Henkel Garcia, director of Caracas-based consultancy Econometrica, said in telephone interview.