Economy
During five years, Hugo Chávez's Administration has pegged the official exchange rate at VEB 2.15 per dollar, despite the fact that the rest of the products, except gasoline, have accumulated a 70 percent increase during such period.

As a result, the Venezuelan currency is overvalued and there is a strong imbalance. What Venezuelans can purchase with VEB 2.15 in their own country is much less than they can buy with one dollar in a foreign country.

Therefore, there is strong incentive to import and the domestic industry, which has to compete with cheaper foreign products, has a lot of problems to grow properly, to create jobs and to diversify country's exports.

Research firm Ecoanalítica prepared an index to measure the overvaluation of Venezuelan bolivar compared to the US dollar, the Colombian peso and the Brazilian real, which are the currencies of Venezuela's three main trade partners.

The index shows that in May 2009 the official exchange rate should be VEB 5.55 per US dollar, which is 158 percent higher than the current value of the bolivar and suggest a 61 percent overvaluation of the Venezuelan currency.

"Venezuela's official exchange with respect to the Colombian peso is 44.8 percent overvalued," Ecoanalítica said. The Venezuelan bolivar is 52 percent overvalued compared to the Brazilian real."

When the economic research firm weighted the foreign exchange imbalance with regard to the three main trade partners, it said that the official exchange rate should be VEB 5 per USD dollar, which is 132 percent over the current level, a 57 percent overvaluation.

Víctor Salmerón
EL UNIVERSAL