Venezuela’s Central Bank Cancels Dollar Auction

Venezuela’s central bank suspended the first dollar auction on its complementary foreign exchange system called since the South American country announced a partial devaluation Jan. 22.

The auction was to have sold $220 million in cash to companies in sectors including paper, medicine and clothing. Results had been scheduled for yesterday.

“The decision shows dollar supply to companies is going to get worse this year,” Ronald Balza, economics professor at the Andres Bello Catholic University, said by telephone from Caracas yesterday. “It’s evident the government is completely improvising the currency measures as it goes along.”

Economy Vice President Rafael Ramirez said Jan. 22 that the system, known as Sicad, would auction $220 million a week for a total of $11.4 billion out of the $42.5 billion in foreign currency to be sold this year. Venezuelans traveling abroad, airlines and foreigners sending remittances home must use the exchange rate determined at weekly auctions.

“This determination owes to a series of anomalies and noncompliance with required procedures, which were detected after an exhaustive review of the orders,” the central bank said in a statement posted on its website yesterday, without providing additional information.

Promises, Questions

This week’s auction was eagerly awaited by Venezuelan newspapers, which cut pages and editions printed because of paper shortage. Newspapers including the 71-year-old El Nacional and the centenarian El Impulso of Barquisimeto said in the past month their immediate survival depends on government’s approval of dollars for paper imports.

The rate set at the latest auction was 11.36 bolivars per dollar, compared with the official <a href="news:linkid=HL17CCXPUVS8 def={|id|:|HL17CCXPUVS8|,|content|:{|Function|:|VEF <CURNCY> DES|},|tooltip|:|FX Spot Rate Description|,|isActive|:true,|UpdateTime|:|2014-02-04T20:21:26.65 38526-05:00|}"><a href="news:linkid=HL17CCXPUVS8">rate</a> of 6.3. On the black market, the bolivar is currently trading at about 81 per dollar, according to, a website that tracks the value on the Colombian border.

President Nicolas Maduro is facing a shortage of foreign currency that’s caused consumer prices to soar 56 percent and foreign reserves to plunge to a decade-low of $21 billion.

If the dollars sold at auctions don’t damp the black market rate, the government may amend laws and enable people to bring more money through “swaps,” Ramirez said on Jan. 23, without providing additional information.

“The government has only had one Sicad auction so far this year and this one was supposed to be the first of the new $220 million dollar size issues that Ramirez promised,” Russell Dallen, the Miami-based head trader at Caracas Capital Markets, said in an e-mailed response to questions. “The terse notice on the central bank website did not answer any questions but certainly created many.”

To contact the reporter on this story: Nathan Crooks in Caracas at

To contact the editor responsible for this story: Andre Soliani at

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