Venezuela Delays Dollar Supply Boost Amid New Protests

Venezuela’s government failed to publish the details of a new foreign exchange market this morning, making it unlikely that today’s auction will go ahead as planned.

There was no mention of the rules in the Official Gazette, where they must appear before the system can be implemented. Economy Vice President Rafael Ramirez said March 7 that the so-called Sicad 2 market would begin today and that the government wouldn’t impose any restrictions on trading. Ramirez also announced $5 billion in financing from China and a potential $2 billion from Russia.

“Sicad 2 will not operate today, perhaps it will be tomorrow,” Jose Guerra, economics professor at the Central University of Venezuela, said by telephone from Caracas. “The delay shows how messy the internal functioning of the government is.”

The government is trying to boost the supply of dollars to end shortages of basic goods and bring down the world’s fastest inflation rate. President Nicolas Maduro also called on opposition leaders this weekend to hold talks to end the wave of demonstrations that have led to daily clashes with police in Caracas and other cities. The opposition, which has rejected the offer of talks before, plans another march today. Their leaders say any talks should be brokered by a third party, such as the Catholic Church.

Maduro has called the protesters “fascists” and “saboteurs” seeking to overthrow his government.

Death Toll

Public Advocate Gabriela Ramirez, speaking on state television March 8, said that 21 people have died during the protests that started in Caracas on Feb. 12.

Doctors and nurses said they will march in Caracas today to protest shortages of materials and medicines, triggered by the lack of dollars. The government has called a rival rally of medical students and workers at the presidential palace.

The government will offer “significant” foreign currency to the new Sicad 2 market, while it continues to ensure an exchange rate of 6.3 bolivars per dollar for essential imports such as medicines, Rafael Ramirez said March 7. Ramirez’s spokesman declined to comment on the delay in starting Sicad 2.

“There will be no pre-set band or rate, it will be a market with a free supply of foreign currency,” Ramirez told reporters in Caracas. “We will also supply currency to help the market flow.”

Francisco Rodriguez, a Latin American economist at Bank of America, said the bolivar would probably weaken in the new market to between 25 and 40 to the dollar, after trading at 11 in an auction at the end of February.

‘Their Fault’

A shortage of dollars has crimped imports, leaving supermarket shelves partially empty and pushing annual inflation to 56 percent.

“It’s their fault we are living with shortages,” opposition Governor Henrique Capriles said at a March 8 protest, according to an e-mailed statement from the opposition alliance. “The government’s biggest mistake is to underestimate what’s happening on the streets.”

Protesters and police clashed in the upmarket Altamira neighborhood over the weekend, with police using tear-gas to clear barricades.

One of the protesters, Alfredo Rodriguez, 27, said he is “privileged” to work at a supermarket because it allows him to obtain basic goods for his partner and daughter. The demonstrations aim to draw attention to rising prices and the reduced purchasing power of Venezuelans, he said. He denied government allegations that the protests were encouraged by foreign governments.

“The government has to do its job instead of wasting time worrying about foreign agents when we’ve got problems here,” Rodriguez said. “Our pockets are empty.”

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