The exchange rate of the Venezuelan bolivar, the country’s national fiat currency, has fallen by 35.51% against the US dollar this week, reaching 8.70 bolivars per US dollar as a result of various factors. According to economists, this will lead to a rise in prices in the near future, with the exchange rate projected to reach 12 bolivar per dollar by December.
The Venezuelan bolivar fell 35.51% against the USD in a week
The strength that the US dollar has shown this week is affecting many lower countries. The Venezuelan bolivar, the nation’s official currency, lost 35.51% of its value against the US dollar. The exchange rate reached 8.70 bolivars per US dollar, an all-time high according to monitor dollar, a popular Twitter account that averages the cost of US currency on multiple exchanges. However, the price on Binance’s popular P2P exchange reached more than 9 bolivars per dollar.
The official exchange rate reached 7.10 bolivars per US dollar, which is 1.60 bolivars below the parallel price. Asdrábal Oliveros, head of market research firm Econalytica, explained that there are two factors that affect the exchange rate: The first has to do with increased public spending, which has put more bolivars in the hands of citizens and companies that are tempted to buy their dollars. To save savings.
The second factor has to do with the intervention that the Central Bank of Venezuela is executing, putting dollars on sale through national banks. This intervention has been cut short this week, sources said, with less than 20% of what is usually auctioned this week being offered.
Effects, Measures and Predictions
For Oliveros, this will lead to a sudden increase in prices, which will affect the inflation numbers that were somewhat controlled until this month. Forecasts for the end of the year predict a continued increase in the exchange rate if the central bank does not intervene in equal amounts to keep the market afloat with foreign exchange.
In this sense, Venezuelan economist Luis Arturo Barcaenas expects the exchange rate to climb to between 10 and 12 bolivars per dollar by the end of the year. Barsenas said:
The monetary mass has doubled in 8 months due to the pressure on the government to pay salaries and bonuses.
The Central Bank of Venezuela will conduct a new intervention this week to put up to $200 million dollars in an auction on national banks to try to stem the exchange rate hike. The bank will normally conduct auctions twice as much as the weekly negotiations.
To ease the task of making payments and handling money, the country had to execute a currency revaluation last year, subtracting six zeros from its currency.
What do you think about the recent devaluation of Venezuelan Bolivar? Tell us in the comments section below.
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