Venezuelan gov't designs new exchange market
The imminent new architecture would allow further devaluation of the local currency
Under the new possible approach, the Foreign Exchange Administration System (Cadivi) will remain as a US dollar source for the import of basic commodities, namely: food and drugs. For the rest of the imports, companies could buy foreign currency more freely, but subject to a cap that has not been set yet.
The idea is to allow state-run oil company Petróleos de Venezuela (Pdvsa) selling petrodollars in this new market so as to secure the supply. Additionally, swaps would be permitted. This way, holders of bonds in bolivars and seeking US dollars could swap them for bonds in US dollars.
Eventually, the company holder of bonds in US dollars could sell them abroad and get the cash needed to import raw materials and machinery, or repatriate dividends.
However, the real issue here is that given the large amounts of money standing in an economy, the US dollar demand would be buoyant. Thus, if authorities are to create a relaxed new market, it will have to implement a heavy devaluation of the Venezuelan currency.
Think tank Ecoanalítica's Director Asdrubal Oliveros estimates such rate may stand at VEB 30 per US dollar.
Translated by Jhean Cabrera
A group of some 60 Venezuelan economists from across the country and from different generations and backgrounds, has met regularly in the past couple of years and now has brought forth a document explaining the reasons of the current emergency and outlining specific proposals on how to address the serious economic crisis the country has plunged into over the last three years.