Barclays Capital: Blinding Sicad exchange rate hints strong devaluation
The investment bank postulates that had the average exchange rate been near VEB 6.30 per US dollar, the Venezuelan government would have deemed it a success and disclosed the data
Failure to disclose the average exchange rate bet by the companies for the US dollars prompts investment bank Barclays Capital suggest a strong devaluation of the local currency, for the second time in 47 days.
"First explanation about why the (Venezuelan) government did not announce the price of the first auction at Sicad seems to be a significant devaluation of the currency," the investment bank hypothesized in a note.
Barclays added that in light of this scenario, Venezuelan authorities abstained from revealing the average price of the bets for the US dollar, thus "avoiding the political cost of the announcement of a second devaluation in less than two-month term."
Had the average exchange rate been near VEB 6.30 per US dollar, the Venezuelan government would have deemed it a success and disclosed the data, they reasoned.
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.