VEB 5.30 per US dollar gains ground in the economy

Financial authorities have set a new strategy. On the one hand, they will increase of imports made with the exchange rate (VEB 5.30 per US dollar) used by the Transaction System for Foreign Currency Denominated Securities (Sitme), a financial mechanism created by the Central Bank of Venezuela (BCV) to be used by companies that do not receive US dollars through the Foreign Exchange Administration Commission (Cadivi). On the other hand, they have cut cheaper imports made through Cadivi with an exchange rate of VEB 4.30 per US dollar.

As a result, transactions made through Sitme gain ground in the economy, and there has been a gradual devaluation of the Venezuelan currency.

Official data show that Cadivi authorized USD 4.9 billion for imports, the smallest amount in the last six years and a 9% decline compared to the same period in 2011. 

At the same time, the BCV reported that in the first quarter of the year, the government disbursed USD 2.43 billion bonds through the Sitme, an amount that represents a 34% hike over the same period last year. 

The economic research firm Síntesis Financera said that taking into account the discount recorded when the bonds are sold abroad, companies have received, at the end of May 11, USD2.9 billion through Sitme so far this year, an amount that represents a 52% increase compared with the same period in 2011.

The government made it clear that it will continue this foreign exchange strategy when it announced that the state-run oil company Petróleos de Venezuela (Pdvsa) will offer USD 3 billion exclusively to the BCV and to state-run banks, to supply US dollars to the Sitme which will allow it to carry out its operations.

Latent inflation

The reduction in the allocation of US dollars to Cadivi does not seem logical in view of high oil prices and current Pdvsa production, which ensure a sufficient amount of US dollars. 

In the opinion of Luis Vicente León, the director of polling firm Datanálisis, "the government does not want to squander US dollars by selling them cheap to Cadivi but it does not want either to announce a devaluation in an election year."

Translated by Gerardo Cárdenas