Venezuela’s unofficial exchange rate on Thursday weakened below 400 bolivars per dollar, according to a widely watched website, slipping 25 percent in a single week as the country’s exchange control system struggles to meet demand for hard currency.

Last year’s tumble in oil prices forced the currency control mechanism to reduce disbursement of greenbacks, spurring shortages of consumer goods and leading to panicked dollar purchases on the unregulated market.

The unofficial rate reached 402 bolivars per dollar on Thursday evening, according to the website DolarToday, a week after crossing 300 bolivars for the first time.

Opposition critics say President Nicolas Maduro has delayed much-needed reforms to the country’s state-led economic model, including an easing or elimination of the exchange controls.

“This will continue as long as the government does not take action,” said Asdrubal Oliveros of Caracas-based consultancy Ecoanalitica.

Maduro says his socialist government is victim of an “economic war” led by opposition businesses with the support of Washington. He describes the exchange rate published by DolarToday as part of a campaign against his government.

The state currency agency sells dollars for a subsidized rate of 6.3 bolivars for priority goods such as food and medicine. The central bank also sells greenbacks through a “complementary” system known as Simadi for around 200 bolivars.

Businesses say they struggle to obtain dollars through either system, leaving them unable to import raw materials or replacement parts. That has led to product shortages that leave consumers waiting in long lines to buy staple goods.

Government officials have acknowledged that maintaining several different exchange rates allows for corruption by businesses or public officials who buy subsidized dollars and then resell them for a hefty profit.

Maduro has ruled out dismantling the exchange controls, saying that would benefit the wealthy.


Categories: Forex

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