Venezuela’s Black-Market Bolivar Slides to Record: Caracas MoverCharlie Devereux
Venezuela’s bolivar plunged to a record low in unregulated trading after last week’s devaluation of the official rate failed to increase the supply of dollars.
The currency weakened 10 percent to 22.36 bolivars per dollar today, according to Lechugaverde.com, a website that tracks the country’s currency in the black market.
The bolivar has declined 18 percent in unregulated trading since President Hugo Chavez, who is recovering from cancer surgery in Cuba, ordered officials on Feb. 8 to devalue the official exchange rate by 32 percent to 6.3 bolivars per dollar. The bolivar’s slide in the unofficial market shows Venezuelan importers fear further restrictions in dollar supply after the government said it was scrapping a currency market administered by the central bank known as Sitme, said Russell Dallen, the head trader at Caracas Capital Markets in Miami.
“It’s a reflection of not supplying enough dollars to the market,” Dallen said in an e-mailed response to questions. “Now there is no dollar outlet at all if you don’t qualify” to receive foreign currency through government channels, he said.
Before Chavez tightened currency controls in 2010, an unregulated market operated by bond brokerages supplied about $100 million a day to importers seeking dollars. That was reduced to $45 million after Chavez shuttered the market and replace it with the Sitme. It fell to as low as $15 million a day following the self-declared socialist’s re-election in October, Dallen said.
Yields on Venezuela’s benchmark 9.25 percent dollar bonds due in 2027 fell six basis points, or 0.06 percentage point, to 8.99 percent at 1:39 p.m. in Caracas. The price rose 0.49 cents to 102.10 cents on the dollar.
Finance Minister Jorge Giordani said today Venezuela needs between $30 billion and $40 billion of foreign currency a year to satisfy import needs. The government will prioritize dollars for essential goods and described Venezuelans’ “addiction” to the dollar as an “illness.”
“We all suffer from an insatiable appetite for the dollar, from a type of dollarized nymphomania,” Giordani said in an interview in the state-run newspaper Ciudad CCS.
Venezuelans turn to the black market when they can’t get access to the so-called Cadivi system that sells dollars at the official exchange rate.
The implied rate for the currency fell to 25 bolivars per dollar yesterday based on trading at the border, Colombia’s Finance Ministry said in a message on its Twitter account.
A weaker currency may further fuel the fastest official inflation rate in the region. About 70 percent of products consumed in Venezuela are imported or assembled from raw materials shipped from abroad, according to the Consecomercio trade chamber in Caracas.
Speculators are attacking Venezuela’s currency, Oil Minister Rafael Ramirez told reporters in Caracas.