Venezuela: Making change
Despite devaluing the bolívar in February, Venezuela’s chronic dollar shortage continues. Another devaluation may well be on the cards
By Girish Gupta
Venezuela’s financial woes are plain to see on
arrival at Caracas’ Maiquetía international
airport. Hawkers vie for hard currency, offering more than
three times the official exchange rate of 6.3
bolívares fuertes (VEF) per US dollar.
But it’s not only the hawkers who are after
foreign currency. Venezuela’s government faces a
severe shortage of dollars.
In February, Venezuelan authorities devalued the
bolívar fuerte by 31.7% to bring down a budget
deficit that had been forecast by analysts at more than 9% of
GDP this year. But the concern is that the action will do
little to meet growing demand for hard currency to pay for
imported goods – and could stoke yet more inflation,
already at rates of over 20%.
"It’s very worrying that with oil at over $100,
the country hasn’t managed to put in order its
fiscal situation in a very...
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