Venezuela to Resume FX Auctions After Detecting FraudAnatoly Kurmanaev and Jose Orozco
Venezuela’s government will resume weekly dollar auctions to companies on Feb. 10 after scrapping this week’s installment because of fraudulent bids.
The central bank will auction $440 million on that date and $220 million a week thereafter, President Nicolas Maduro said on state television yesterday. The auction system, which provides companies in selected sectors with dollars at the higher, complimentary rate, will be strengthened this year, he added.
“We detected irregularities in the last auction,” Maduro said. “Strange people got involved who have tried to rob the Republic.”
Venezuela will release $42.5 billion of foreign currency to the economy this year, including $11.4 billion through auctions, as it tries to ameliorate dollar shortages that are causing irregular supply of imported goods ranging from shaving blades to milk.
The auction system, known as Sicad, last sold a dollar for 11.36 bolivars, compared to the primary rate of 6.3.
Economy Vice President Rafael Ramirez said today the government plans to start a “permuta,” or swap, foreign exchange market before the end of the month, Caracas-based El Mundo newspaper reported.
Ramirez said the market will not be similar to the previous swap market closed in 2010, El Mundo reported. The government is studying how to set the exchange rate for the market, where transactions will be allowed once the country’s illicit foreign exchange law is modified, Ramirez said, according to El Mundo.
Venezuela’s benchmark bond due in 2027 rose 2.66 cents to 66.70 cents on the dollar today in New York. The yield on the bond fell 66 basis points to 15.07 percent, the biggest decline on a closing basis since June 2, 2010.
The government has been limiting the supply of dollars at the primary rate since the start of the year, as reserves hit a 10-year-low. Airlines, Venezuelans traveling abroad and foreigners sending remittances abroad must now use the rate set at auctions.