Venezuela’s Currency Is Collapsing on the Black Market Again
- The currency traded flat for most of 2016 but is now falling
- If history is a guide, black market bolivar may fall further
Venezuela’s currency is so weak, shopkeepers have taken to weighing it. In 2015, the black-market bolivar frequently fell more than 10 percent a month. In the six months through September the black-market currency actually appreciated, even as prices for unregulated goods began to skyrocket. The calm ended in October, when the bolivar lost almost a third of its value compared to the U.S. dollar in a matter of weeks.
“There are a combination of things going on, as the stability we saw for most of this year was because things last year had been so abrupt and the decline so steep,” Henkel Garcia, director of Caracas-based consulting company Econometrica, said in a telephone interview. “Public spending may be pressuring the black-market rate, in addition to the exasperation of the people and political tension. People see the decline and start to buy more” dollars.