INSUBCONTINENT EXCLUSIVE:
The government has let the official exchange rate slide to nearly 43 bolivars per dollar, down from 37 in early October
This move aims to address the growing gap between official and black market rates.The currency has faced intense pressure since the disputed
July presidential election
Venezuelans have been selling bolivars for U.S
dollars, seeking financial security
On the black market, the bolivar now trades at around 51 per dollar, compared to 44 in early October.This depreciation strategy carries
substantial risks for a country with a history of hyperinflation
He achieved this by cutting spending and injecting dollars into the currency market.The central bank has spent over $2 billion in recent
months to stabilize the currency
The country experienced a severe economic contraction from 2013, with GDP shrinking by around 80%
Recent years have seen a modest recovery, but challenges persist.The Venezuelan Finance Observatory reported that monthly inflation in
The annualized rate reached 46%, indicating an acceleration in price increases compared to August
The accumulated inflation rate for 2024 hit 30.4% by September.Education costs rose by 6%, while food prices increased by 5.1%
Services and entertainment saw increases of 4.5% and 4.1% respectively
However, this approach carries risks
remains highly dollarized
Changes in the bolivar-dollar exchange rate typically pass through to prices almost linearly
The parallel market exchange rate, not the official one, plays a crucial role in price formation.The coming months will be critical in
determining whether the government can maintain economic stability
Political uncertainty following the July elections has raised concerns about the sustainability of recent economic gains.This situation
highlights the delicate balance between currency management and inflation control
