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One single exchange of 35 bolivars per dollar recommends Bank of America to Venezuela

One single exchange of 35 bolivars per dollar recommends Bank of America to Venezuela

Posted by Dubraswka Aguilar on November 21, 2014

The existence of three official exchange rates in Venezuela for transactions in foreign currency (6.30 bolivars for health and food; SICADI and SICAD II), together with the so-called parallel market, which currently fluctuates about 120 bolivars per dollar creates many distortions in the Venezuelan economy, as they have denounced subject specialists.

That is why the director of Bank of America to the Andean region, Francisco Rodriguez, has recommended to the Government of Venezuela to unify the exchange rate of 35 bolivars per dollar, because the idea that devaluation has a contractionary effect does not apply to the current contraction in imports.

Rodriguez explained that "Venezuela is still a very strong exchange distortion. The high prices that come with a devaluation of imports are not causing a reduction; rather they would be consistent with these and other higher levels. As the price adjustment occurred as people are paying up to 120 per dollar on the parallel market, you can unify in 35. That means all products are making 120 would drop to 35 ".

The Bank of America representative said the government of Venezuela is printing bolivars equivalent to 40,000 million dollars (31.907 million euros) a year because it does not have income.

 "State revenues are the dollars, but give them away. The worth 120 bolivars on the black market sell at 6.30. So what it does is it prints money. Any state that does that will cause a rise in inflation, "said Rodriguez.

For the specialist, the unification of the exchange rate would be a positive step for the economy because "it would be expansive," allowing the stabilization of prices. Rodriguez says he does not understand "how the Government can continue dealing with a political situation in which inflation is accelerating, the shortage is rampant. And apparently there is no prospect of a stable macroeconomic this problem. They are serving the micro, but if it does not fix the macro, any of the other things will work. "

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