ESPACIO PUBLICITARIO
CARACAS, Monday January 27, 2014 | Update
 
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Venezuela's forex rate averages VEB 7.6 per dollar after devaluation

A recent adjustment in the forex rate fails to correct overvaluation of the Venezuelan currency

Venezuela's low forex rate encourages imports (File photo)
EL UNIVERSAL
Monday January 27, 2014  10:08 AM
Pressured by foreign currency demand, the Venezuelan government has partially devalued the local currency, thus adjusting the exchange rate for some sectors of the economy from VEB 6.30 per dollar to the rate of the Ancillary Foreign Currency Administration system (Sicad), VEB 11.30. 

Deutsche Bank remarked in its latest report that the move translates into an average forex rate of VEB 7.6 per dollar. The investment bank believes the forex rate will remain below VEB 10 per dollar, even if Sicad's rate is progressively adjusted to VEB 20 in the months ahead.

Consequently, as Venezuela's inflation is significantly higher than that in its trade partners, imports are very cheap, while non-oil exports are very expensive.

In its exchange rate and inflation index of 61 countries as of November 30, the Switzerland-based Bank of International Settlements (BIS) estimated the bolivar overvaluation at 55%.

vsalmeron@eluniversal.com

Translated by Jhean Cabrera
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