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Sorry - this page has been removed. Venezuela eases currency controls with new foreign exchange system
(4 months later)
This could be because it launched early, our rights have expired, there was a legal issue, or for another reason. Venezuela’s government has announced ​that it will allow a free-floating exchange rate for the country’s battered currency while maintaining a subsidi​sed rate for key imports.
The change amounts to an easing of 12-year-old currency controls and marks a small step towards market economics as the state-led model created by the late socialist leader Hugo Chávez struggles with shortages, swelling grocery lines and recession.
For further information, please contact: However, the changes by Nicolás Maduro’s government do not eliminate the unwieldy three-tiered exchange structure seen by investors as the country’s principal stumbling block to economic growth.
​The government sells dollars for the most crucial imports at rates of 6.3 or 12 bolivars, demanding that retailers hold down prices to reflect the subsidies. It has also been selling currency at a third rate, around 52 bolivars to the dollar, but officials say that rate will now be replaced by a more transparent system in which dealers and buyers exchange currency on a supply and demand basis.
​The finance ​minister, Rodolfo Marco Torres, said the new system would be “totally free​”, with “the market itself setting the exchange rate​”. But officials said trades would have to be made through authori​sed banks or exchange houses and only people with dollar-denominated bank accounts can take part.
Related: Venezuelan states ban night queues outside shops as grocery shortages continue
As it struggles with a cash crunch, the government has limited the dollars it auctions at any of the rates, and businesses say delays in getting money for imports ​have fed shortages. The exchange difficulties have driven people to an illegal parallel market where bolivars have been trading at about 190 per dollar.
The new system announced on Tuesday could allow greater access to dollars, but at a far higher price than legally possible before. ​The central ​bank ​president, Nelson Merentes, encouraged Venezuelans living outside the country to use the new system to send money back home.
Analysts called the new system an effective devaluation, which most economists agree is needed on a larger scale to right the country’s economy, but also said the new system would ​probably be more tightly regulated than officials suggest.
With the threat of street protests and a legislative election looming, the government is likely to look for ways to channel scarce dollars to politically sensitive goods and take steps to prevent capital from leaving the country, said Risa Grais-Targow, an analyst at the Washington-based Eurasia Group.
“I think it will be less flexible because the government’s incentives right now are to increase control,” she said.
The full regulations governing the new market are to be published on Wednesday.