You are here: Home » International » News » Finance
Business Standard

Venezuela devalues currency by 35% to align it with USD on black market

However, the black market rate for the dollar was 30 times the official rate, as the government artificially overvalued the bolivar

AFP | PTI  |  Caracas 

Venezuela currency
Photo: Shutterstock

devalued its by almost 35 per cent on Monday to bring it into line with the of the dollar on the black market.

The is now fixed at 3,200 bolivars to the dollar, almost matching the 3,118.62 offered on the site that acts as the reference for the black market.

Exchanges will now be provided by a technological platform operated by a private firm called Interbanex, which said it would operate a "supply and demand" exchange.

The announcement represents a huge about-turn by the socialist regime of Nicolas Maduro, which has imposed strict controls since 2003, all the while monopolizing foreign reserves.

That forced individuals and businesses to turn to the black market to get dollars -- a necessity in a country wracked by an economic crisis marked by hyperinflation and shortages of basic necessities.

However, the black market rate for the dollar was 30 times the official rate, as the government artificially overvalued the bolivar.

Specialists have urged Maduro to abandon the policy of controlling exchange rates in order to combat the country's economic crisis and inflation, which the Monetary Fund says will reach 10 million per cent this year.

The move comes at a time when is also mired in a political crisis after declared himself "acting president" last week.

Guaido was recognized as the legitimate by a number of countries, including the United States, which has slapped tough economic sanctions on the Maduro regime.

Maduro has accused the US and Guaido of attempting to engineer a coup d'etat.

Asdrubal Oliveros, director of Ecoanalitica, says move has come too late.

"With the dynamic the country is in, this isn't viable and it will make things worse," he said.

In August, Maduro launched a series of economic reforms including devaluing the bolivar by 96 per cent, but since then it has lost another 98 per cent of its value.

First Published: Tue, January 29 2019. 00:05 IST
RECOMMENDED FOR YOU