March 13 (Bloomberg) -- Venezuela will establish a new parallel exchange rate as it seeks to crack down on a black market in which the dollar is worth about four times more than the official rate, Oil Minister Rafael Ramirez said.
“We’ll announce measures that will establish another reference for the parallel dollar,” Ramirez told reporters in Caracas today. “There’s a permanent attack against our currency by enemies.”
Venezuela plans to create an alternative currency market to expand the supply of dollars at a weaker exchange rate, said a government official familiar with the matter. The government is finalizing operational details of the new market that will exchange cash and dollar-denominated bonds, said the official, who asked not to be named because no final decision has been made. The announcement will be made before the April 14 presidential election, the official said.
Before his death from cancer on March 5, former President Hugo Chavez approved a 32 percent devaluation that weakened the currency to 6.3 bolivars per dollar. He also shut down a central bank-administered currency market that weakened the dollar on the black market to about 22.5 bolivars, according to Dolar Today and Liberal Venezolano, two websites that track the exchange rate on the Venezuelan-Colombian border. The so-called Sitme system that was closed traded at 5.3 bolivars per dollar.
Interim President Nicolas Maduro’s government will implement economic measures approved by Chavez before his death, Ramirez said. More details will be announced by the government’s exchange rate administration office, he said.
Establishing a parallel currency market would bring down the rate of the black market dollar, said Asdrubal Oliveros, director of Ecoanalitica, a Caracas-based financial consultancy.
“We understand that it won’t be a parallel market where people can go and freely buy or sell dollars as they wish,” Oliveros said in a phone interview. “It will be a restricted alternative currency market with an exchange rate different from the official dollar, which means the government won’t be able to eliminate the black market altogether.”
Venezuela has sufficient foreign currency to meet demand and the current foreign exchange rate system operated by a board known as Cadivi is working normally, Ramirez said.
“Fortunately, we have absolute control of oil income to make the adjustments on what needs to be adjusted,” he said.
Venezuela’s scarcity index that measures the amount of goods out of stock on the market reached its highest level on record in January as the government cut the supply of dollars to importers.
Chavez, who first established currency controls in 2003, in 2010 shut down an unregulated market operated by bond brokerages that supplied about $100 million a day to importers. That was reduced to $45 million after Chavez shuttered the market and replaced it with the Sitme, which was closed in February.
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