A person holds bolívar notes in one hand and US dollar bills in the the other. File photo.
On Saturday, December 10, the president of Venezuela, Nicolás Maduro, announced that he has instructed his economic team to apply “measures in defense of the official exchange rate,” after a drastic devaluation of the national currency, bolívar, in recent weeks.
“Facing the attack of the criminal [black market] dollar exchange rate, I instructed the economic team to take measures in defense of the official exchange rate, for a healthy trade that respects the rights of the people,” President Maduro announced. “We will guarantee a happy Christmas, defeating the mafias from Miami. No one will stop economic growth!”
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The parallel, black-market, criminal or unofficial dollar exchange rate closed at Bs. 18.26 per dollar on Friday, which was a 29% difference over the official exchange rate, which closed at Bs. 14.12 the same day. Black-market exchange rate gets spread through websites and Instagram accounts. Some merchants try to sell their products at the black-market dollar rate when people want to pay them in bolívars, alleging that their suppliers sell their products using the black market rate and not the official exchange rate enforced by the Central Bank of Venezuela (BCV).
Frente al ataque del dólar criminal, ordené al equipo económico tomar medidas en defensa de la Tasa Oficial, por un comercio sano que respete los derechos del pueblo. Garantizaremos unas navidades felices venciendo las mafias mayameras. ¡Nadie detendrá el crecimiento económico!
— Nicolás Maduro (@NicolasMaduro) December 10, 2022
The official exchange rate is the weighted average of the operations of the exchange tables of the banking institutions, which sell dollars through their web pages or to major customers.
The official exchange rate also registered a strong devaluation in the last 30 days, when comparing its value last Friday, December 9 (Bs. 14.12) with that of November 9, when it was at Bs. 8.91, which implies an increase of 58% in only one month.
On September 12 it was at Bs. 7.95 and on October 10 it was at Bs. 8.19, figures reflecting a sharp devaluation of the bolívar.
The BCV’s main goal in recent months has been to keep inflation at bay after years of hyperinflation. This recent devaluation despite the Venezuelan economy being de facto dollarized, represents a serious threat to the government’s goals of controlling inflation in the country.
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According to many experts, the current situation is the result of a shortage of dollars in the BCV’s coffers due to logistical problems related to the US and European blockade against the Venezuelan economy and PDVSA, together with an increase in currency circulation due to the economic recovery and the end-of-year injections of resources into the economy by the state via end-of-year bonuses, payment to suppliers, etc. All this puts pressure on the bolívar, with more people demanding dollars in a market that does not have enough dollars.
Many right-wing outlets, influencers and politicians has been trying to exploit the devaluation to ramp up tensions and call for protests, when in reallity many Venezuelans, even the ones working for the government and being paid in bolívars, earn money directly or indirectly in dollars. Thus the impact of the devaluation does not directly affect most Venezuelans.
The most significant effect of the devaluation on ordinary Venezuelans comes from the gap between the official exchange rate and the black market exchange rate. The gap is usually around 3-6%, but currently it is almost 30%. In this situation, retailers markup product prices in dollars in order to comply with the use of the BCV exchange rate while customers pay in bolívars, thus creating an irregular increase of prices expressed in dollars, and it is this issue that is affecting the majority of Venezuelans.
(Alba Ciudad) with Orinoco Tribune content
Translation: Orinoco Tribune
OT/JRE/SC
