Venezuela’s Currency Is Collapsing on the Black Market Again

[Bacchus4.0]

http://www.bloomberg.com/news/articles/2016-11-01/venezuela-s-currency-is-collapsing-on-the-black-market-again

Venezuela’s currency is so weak, shopkeepers have taken to weighing it. In 2015, the black-market bolivar frequently fell more than 10 percent a month. In the six months through September the black-market currency actually appreciated, even as prices for unregulated goods began to skyrocket. The calm ended in October, when the bolivar lost almost a third of its value compared to the U.S. dollar in a matter of weeks.

“There are a combination of things going on, as the stability we saw for most of this year was because things last year had been so abrupt and the decline so steep,” Henkel Garcia, director of Caracas-based consulting company Econometrica, said in a telephone interview. “Public spending may be pressuring the black-market rate, in addition to the exasperation of the people and political tension. People see the decline and start to buy more” dollars.

Venezuela has maintained strict currency controls since 2003 and currently has two legal exchange rates -- known as the Dipro and Dicom rates -- of 10 and 658 bolivars per dollar used for priority imports. On the black market, where people and businesses turn when they can’t obtain government approval to purchase dollars at the legal rates, the bolivar has weakened 50 percent over the past year to 1,567 bolivars per dollar on Nov. 1, according to dolartoday.com, a widely watched website that tracks the exchange rate in Caracas. On the border with Colombia, the rate is even weaker at 1,737.50 bolivars per dollar, according to the website.