Venezuela is reforming its currency laws to start a third dollar allocation system in the “coming hours,” President Nicolas Maduro said yesterday as a shortage of greenbacks pushed product scarcity to a record.
“The idea is to have supply of foreign exchange beyond the state, regulated by the state, combining market mechanisms with state direction,” Maduro said. The mechanism would come in addition to the state’s currency board that sells dollars at the official rate of 6.3 bolivars per dollar and an auction system that last sold U.S. currency at 11.36 bolivars per dollar, he said.
Economy Vice President Rafael Ramirez said last week the country planned to start operating a new currency swap market before the end of the month that would be different from one that was shuttered in 2010. The South American country resumed dollar auctions on a secondary system, known as Sicad, on Feb. 10 and said it would sell $440 million.
The government partially devalued the bolivar last month by moving airlines, incoming foreign investment and travel allowances to a secondary rate set at Sicad auctions amid a 10-year-low in reserves.
Venezuela’s central bank said yesterday that the scarcity index reached 28 percent in January, the highest since the central bank created the measure in 2005, meaning that more than one in four basic goods was out of stock at any given time.
Consumer prices rose 3.3 percent last month, compared to a 3.6 percent median estimate of seven analysts surveyed by Bloomberg. Prices rose 56.3 percent from a year earlier, the central bank said in a statement on its website.
Maduro, who said that the new system would be known as “Sicad 2,” has blamed inflation and shortages on an “economic war” waged by the “parasitic bourgeoisie.” He gave businesses until Feb. 10 to cut prices to “fair” levels and reduce their profit margins to a maximum of 30 percent.
Venezuela will release $42.5 billion of foreign currency to the economy this year, including $11.4 billion through auctions in the Sicad system, as it tries to ameliorate dollar shortages that are causing irregular supply of imported goods ranging from shaving blades to milk. Maduro said yesterday that the country has sufficient foreign currency to meet its needs.
“There will be four exchange rates,” Asdrubal Oliveros, director of Caracas-based consultancy Ecoanalitica, said in a telephone interview. “When I hear Maduro say that Sicad 2 will be directed by the state, it makes me think that they are not going to let the rate float and that it will be at a weaker rate than Sicad 1, maybe around 25 bolivars per dollar.”
On the black market, one dollar sells for around 84 bolivars, according to dolartoday.com, a website that tracks the rate on the Colombian border.
Procter & Gamble Co. (PG:US), the world’s largest consumer-products maker, lowered its forecast for profit and sales growth this year because of currency exchange-rate fluctuations and policy changes in Venezuela.
Revaluing some portions of its business in Venezuela at the government-set exchange rate will result in a charge of as much as 10 cents a share, P&G said yesterday in a statement before Maduro announced the creation of the second Sicad system.
Venezuela has requested a meeting with the head of Latin America for Toyota Motor Corp. (7203), the world’s largest automaker, after it said it is halting production in Venezuela as of Feb. 13 due to a delay in receiving customs clearance for parts.
“All the Toyota manager says is that they want dollars,” Maduro said. “Your job is to produce. Let’s agree on what needs to be brought in. It’s the parasitic mentality, and this game is going to go bad for them. I call on the working class to be alert for the decisions we are going to make after we meet with them.”
Car sales in Venezuela fell 87 percent in January from a year ago to 722 units, the Caracas-based automotive chamber of commerce Cavenez said Feb. 6. Ford Motor Co. (F:US), the second-largest U.S. automaker, said last month that it was reducing production in the country as the availability of U.S. dollars crimps its ability to pay suppliers.
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