CARACAS, Wednesday January 30, 2013 | Update

Petrodollars to raise forex supply in Venezuela by USD 10 million per day

Venezuela's domestic market is in need of higher US dollar supply

US dollar supply via the Transaction System for Foreign Currency Denominated Securities (Sitme) dropped from USD 44 million per day in January-November to USD 15 million per day in December 2012 (File photo)
Wednesday January 30, 2013  12:17 PM
Pressured by an economy demanding larger sums of US dollars, the Venezuelan Government has raised by USD 2.47 billion the amount of petrodollars that state-run oil company Pdvsa will transfer to the Central Bank of Venezuela (BCV).

By doing this, the BCV will be able to sell more US dollars to companies upon authorization granted by the Foreign Exchange Administration Commission (Cadivi). However, will the increase be enough to put and end to the shortage of US dollars on the market?   

It all seems that although the move is a pressure relief valve, a lot more is required. Think tank Ecoanalítica's CEO Luis Saboin explained that upon the implementation of the decision, Cadivi would be able to increase its daily US dollar sales oriented to imports, traveling, and remittances by USD 10 million. However, this is certainly not a significant change. 

If Pdvsa fully transfers to the BCV the expected amount of money, US dollars for imports would increase by 9% this year. However, since imports continue growing, it may not be sufficient.

In 2012, imports jumped to USD 56.35 billion, the highest figure in 16 years, and amounted to 59% of Venezuelan export revenue.

Via Cadivi, companies purchase dollars to import basic commodities such as food and drugs. Companies importing other products rely on the Transaction System for Foreign Currency Denominated Securities (Sitme), which sells USD dollars through bonds.

Notwithstanding, a sharp drop in the daily sale of US dollars via Sitme was reported late in 2012, from USD 44 million per day in January-November to USD 15 million per day in December.

Translated by Jhean Cabrera
This is all there is

A simple reason: there is oil galore, would suffice to explain Guyana's actions. Another explanation lies in the little or none efforts made by the Venezuelan government to thwart the move by the Guyanese. This is certainly not a new problem, but a problem only recently highlighted because oil is involved. But what other resources does the disputed area hold? For most of us it is a section on the map with black and white stripes on it, a depiction of something distant, alien, a nothingness not worth paying much attention to in geography classes back in elementary school.

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