Venezuela Paves the Way to Legalize Dollar Trade in Black Market

Venezuela’s President Nicolas Maduro paved the way to legalize dollar exchange in the black market in a decision published today in the official gazette, according to two Caracas-based economic research firms.

“The new law allows the central bank to do what it wants regarding currency rules without seeking congressional approval,” Ecoanalitica director Asdrubal Oliveros said by phone from Caracas today. “It opens the door for the government to make currency system more flexible, if it chooses to do so.”

While the law doesn’t legalize the black market, it gives the central bank the choice of doing it, said Henkel Garcia, director of Econometrica.

A decade of currency controls has made dollars increasingly scarce in Venezuela, causing shortages of basic goods and pushing inflation to 63 percent in August. People who don’t have access to one of the three official exchange rates, resort to the black market, where the bolivar fell more than 30 percent since the start of the month. A dollar is worth 151 bolivars in the streets of Caracas compared with official rates that range from 6.3 to 50.

Companies and people who conduct operations related to securities issued by Venezuela and subject to currency regulations and non-residents in the country for less than 80 days were added to list of entities excluded from obligation to declare source of their dollar holdings, according to the illicit currency law dated Nov. 18 and distributed today.

Maduro’s decree also removed from the list of illegal transactions the purchase of currency outside the government’s legal auctions.

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