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AICEP
Agência para o Investimento e Comércio Externo de Portugal

CABEÇALHO

Venezuela: Bolivar continues to plummet in June.

At the twentieth Central Bank Dicom auction held on 28 June, the bolivar sold at 134,262.5 VEF per EUR (approximately 115,000 VEF per USD), weakening 20.1% from the 111,734.4 VEF per EUR (approximately 96,000 VEF per USD) rate in the previous auction held on 25 June. The Bank offered nearly USD 1.0 million, which was far above the amount allocated in the previous auction.

Despite the official bolivar’s persistent loss of value, it remains grossly overvalued when compared to its parallel rate. On 28 June, the bolivar traded at 3.4 million VEF per USD, strikingly below 25 June’s 2.9 million VEF per USD. The parallel market bolivar has plummeted since mid-2017 due to dollar shortages, rapid money printing and soaring inflation in the economy. Although there is a lack of official data, reports suggest that the country is suffering from hyperinflation and a severe economic and humanitarian crisis. Although officials raise the minimum wage several times a year, it is unable to keep up with the plummeting exchange rate and soaring inflation. On 20 June, the government tripled the minimum wage; however, it is still below USD 2.0 per day when calculated with the black market exchange rate.

LatinFocus Consensus Forecast panelists foresee severe pressure in both the official and the parallel markets. Given the unpredictable nature of developments in Venezuelan forex markets, several panelists have given up providing exchange rate forecasts.

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