Commodities, Currencies, Emerging Markets

Venezuela Says Not Planning Currency Devaluation Or Changes To FX System

The Venezuelan bolívar.  Photo courtesy of Banco Central de Venezuela, BCV

The Venezuelan bolívar. Photo courtesy of Banco Central de Venezuela, BCV

Venezuela does not plan to devalue its currency or make any changes to its existing foreign exchange system, the nation’s Finance Minister Rodolfo Marco said during a televised interview with local media on Sunday, according to Reuters.

“There is a guarantee that we will maintain that foreign exchange system in such a way as to meet all the country’s needs,” the Finance Minister said during the interview.

Venezuela’s currency control system, which uses a three-prong approach, providing U.S. dollars on three different official exchange rates: 6.3 bolivars for “priority goods”, around 12 bolivars at the “intermediate” Sicad I rate, and around 50 bolivars at the “complementary” Sicad II rate.

Reuters highlights that the OPEC nation of Venezuela could perhaps suspend sales of U.S. dollars at a rate of 6.3 bolivars to shield the nation’s tumbling currency reserves amid falling oil prices.

The fall in oil prices comes at a particularly bad time for Venezuela amid the nation’s soaring inflation, a plunge in the value of the national currency to all-time lowsdepleting foreign currency reserves (currently at the lowest level since November 2003), weak or contracting economic growth (the Venezuelan government has suppressed official GDP data), food and product shortages, fleeing global airlines and manufacturing firms, tremendous debt challenges, and a growing risk of a sovereign debt default (herehere, and here).

Sources: Reuters, WSJ, Bloomberg, The Economist, El Universal, Business Insider

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow Us On Social Media

Google Translate

Our Discussion Groups

Facebook Group
LinkedIn Group

Follow EMerging Equity on WordPress.com

Our Social Media Readers

Digg
Feedly
%d bloggers like this: