Venezuela will create an alternative currency market to crack down on a black market in which the dollar is worth about four times more than the official rate, interim President Nicolas Maduro said.
“It’s now ready, we’re missing some details on the mechanisms,” Maduro said in an interview on the Venevision network yesterday. “We hope to announce it very soon, activate it, incorporating all the economic sectors.”
The new state-run system will replace a central bank-administered currency market known as Sitme and would seek to complement the current foreign exchange rate system known as Cadivi, Maduro said. The complementary system will provide sufficient foreign currency for the economy while meeting the country’s “real needs,” Maduro said.
Venezuela will create a market to expand the supply of dollars with a weaker bolivar 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, President Hugo Chavez approved a 32 percent devaluation that weakened the currency to 6.3 bolivars per dollar. He also shut down the Sitme, pushing 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 official exchange rate on the Sitme system had been 5.3 bolivars per dollar.
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 before Maduro’s comments. “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’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 in turn was closed in February.