- Venezuela launches exchange mechanism
Venezuela began to apply a new exchange system this Monday that allows private banks to buy and sell foreign exchange, but according to analysts, it will hardly cover the demand for dollars.
In practice, this system replaces the auctions of the system called DICOM, which have been in force since early 2018 and are supervised by the BCV. But although it is flexibility, the exchange control in power in Venezuela since 2003 remains in effect, analysts warn.
The Government of Nicolas Maduro, confronted with the worst economic crisis in Venezuela’s recent history, was forced to take this step after the “”last round of US Treasury sanctions that included the BCV,”” explained Henkel Garcia, Director of the Econometric firm.
As A result of these measures, the banks that have a relationship with the American system have refused to process transactions by the BCV, in fear of reprimand from Washington, carrying to Caracas to migrate the order to the private banks.
But although a “”more transparent, more fluid”” mechanism will be produced in the fixing of the exchange rate, in a context of a lack of foreign exchange due to the severe economic crisis, “”there will be no increase in supply,”” Garcia warned.
“”The generation of dollars between private is shallow, so the level of dollars that can be traded (…) it is minimal compared to the needs”” of the country, said The Economist Asdrubal Oliveros.
The private sector in Venezuela needs between 50 and 80 million dollars a day, and this year, DICOM offered only 50 million dollars, Garcia exemplified.
The exchange rate shall be determined by transactions in banks. The last DICOM rate was set at 5,203 bolivars, slightly lower than that recorded in the parallel market (5,500), dominant in the economy in the face of currency drought.
The BCV justified the new system as part of efforts to control hyperinflation-which could reach 10,000,000% according to the IMF – and to energize the Venezuelan economy, which has seen a contraction of its GDP of 50% since 2014.
Although García warns that the new measure does not solve the underlying problems, he does observe an effort by Maduro to “”alleviate”” the crisis, with lax control of price control or tolerance with a de facto dollarization in the streets.
- And all these, where’s the dollar going?
This week, the price of the currency climbed, even though oil continued to rise, which would guarantee in the short term a more excellent supply of foreign exchange for the country. Many are wondering what is going on with this market.
Something is happening: the week closed with a representative market rate of $3,227, the highest in the last three months.
According to the Itapúa Department of Economic Research, “depreciation of the Colombian peso has recently been observed, wiping out the gains recorded earlier this month. This, despite the rise in oil prices, which reached peak levels in the last six months. The devaluation of the local currency would be explained by a strengthening of the dollar globally in the face of positive data from the US economy and a series of publications that disappointed markets in Europe in particular. Also, central banks around the world have taken a laxer stance contributing to American dollar gains.”
- Making a $ 100,000 bill only costs $ 145
In the hands of many Colombians, the ticket with the largest denomination in the country’s monetary history is already circulating. But, contrary to its value, producing the paper money that this time includes the adroit effigy of former president Carlos Lleras Restrepo costs less than many believe.
The new 100,000 pesos’ banknote opens the way for the printing of a new family of paper money that will replace the current one in its entirety and improve security and prevent counterfeiting, as it has the latest technology in manufacturing.
The ticket has high relief printing. One such brand will be the braille system to help visually impaired people recognize its value. It also has images with change and color of movement and hidden letters (BCR). In ultraviolet light, the surface shall remain opaque except for small fluorescent fibers.
The banknotes also have micro texts and geometric figures to observe with a magnifying glass. Also, watermarks with the image of Carlos Lleras Restrepo’s face appear three-dimensional. These are just some of the features.
In spite of all these advances, the Bank of the Republic will only cost 145 pesos to print every 100,000 pesos’ banknote. This is the highest production cost, as smaller bills, such as 2,000 or 5,000, will cost only 90 pesos.