As a result, the Venezuelan bolivar’s exchange rate, which is the nation’s fiat currency, fell 35.51% to the U.S.$ this week. It now trades at 8.70 bolivars to the U.S.$. Economists predict that this will lead to an increase in prices, as the exchange rate could reach 12 bolivars per $1 by December.
Venezuelan Bolivar Drops 35.51% Against USD in a Week
The strength of the U.S. Dollar this week is affecting many Latam nations. Venezuelan bolivar lost 35.51% to the U.S. Dollar, making it the country’s official currency. According to the Reuters, the exchange rate was 8.70 bolivars for every U.S. dollars. This is an unprecedented high. Monitor DolarA popular Twitter account, @Standard_U.S.A. shows the average cost of U.S. currency across several exchanges. The prices for the Binance P2P exchange were however higher than $9 bolivars per $1
Official exchange rates were 7.10 bolivars to the US dollar. This is 1.60 bolivars lower than the parallel rate. Asdrubal Oliveros is head of Ecoanalitica Market Research. He explained that the first factor that influences the exchange rate is the growth of public spending. It has placed more bolivars into the hands of individuals and businesses, who have been enticed by dollars to save their money.
Other factors include the Central Bank of Venezuela’s intervention which saw dollars being sold through the national banks. The intervention by the Central Bank of Venezuela has decreased this week. Sources reported that 20% less was being offered.
The Effects of Measures and Predictions
Oliveros predicts that this will lead to a sudden rise in prices. This will impact the previously somewhat managed inflation numbers. Predictions for the end of the year foresee the exchange rate’s continued rise if the central bank does not interfere with the same amount of funds to keep the market fed with foreign currency.
Luis Arturo Barcenas (a Venezuelan economist) expects that the exchange rate will climb between 10-12 bolivars to the dollar this year. Barcenas stated:
Because of the increased pressures on the government to pay salaries and bonuses, the monetary masses has more than doubled over the past 8 months.
In an attempt to stem the rising exchange rate, the Central Bank of Venezuela organizes a fresh intervention. They will put 200 million dollars up for auction at national banks. It will auction twice the amount normally offered weekly.
To make it easier to pay and handle money, the country needed to perform a currency redenomination.
How do you feel about the devaluation the Venezuelan bolivar has received? Leave a comment below.
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