The Wall Street Journal reports,"Venezuela’s bolívar traded nearly 80% weaker Monday compared with the country’s fixed official exchange rate, in a new currency market unveiled by the government to make dollars more accessible and ease shortages of food and consumer goods".
"Dollars changed hands at an average rate of 51.86 bolívares in the debut of the foreign-exchange market, dubbed Sicad II, the Central Bank of Venezuela said.
The new rate, which will also be a reference rate for tourists, came in close to the black-market rate, which on Monday sat at 58.63 bolívares to the dollar, according to DolarToday.com, a website that tracks the market".
President Nicolás Maduro’s government launched Sicad II to get more dollars readily available to locals and weaken a thriving currency black market, which it says is part of an effort by its foes to destabilize the economy.
“Mega-devaluation is a hard blow to the incomes of all Venezuelans,” opposition leader Henrique Capriles said in a Twitter message. Calling it “Nicolas’ black Monday,” he accused Mr. Maduro’s regime of trying use the country’s political tensions as a cover to unveil an economic adjustment that punishes average citizens. “The government doesn’t want us to talk about it but we won’t let that happen,” Mr. Capriles said.
Devaluing the currency helps the government fetch more in local currency terms when it converts dollars earned through overseas oil sales and helps narrow a fiscal deficit estimated at 15% of gross domestic product.
Mr. Maduro said the new market is expected to supply as much as 8% of Venezuela’s dollar needs.
Despite welcoming the move, many economists said the new market isn’t likely to be enough to settle the economy’s imbalances or meet dollar demand. “I give this market a short life,” said Angel Garcia Banchs, director of Caracas-based consultancy Econometrica, adding that local people selling dollars will still want to go to the black market, where they can fetch more in bolívares than in Sicad II.
