ESPACIO PUBLICITARIO
CARACAS, Thursday March 28, 2013 | Update
 
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FOREIGN EXCHANGE

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

ENDER MARCANO |  EL UNIVERSAL
Thursday March 28, 2013  10:56 AM
Venezuela's Ministry of Planning and Finance briefed on Wednesday on the outcome of the first foreign currency auction through the Ancillary Foreign Currency Administration System (Sicad). USD 200 million was apportioned among 383 corporate bidders, at an unknown exchange rate.

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.
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