UPDATE 1-Venezuelan central bank sells $215 mln at currency auction

Wed Jul 17, 2013 6:30pm EDT

By Eyanir Chinea

CARACAS, July 17 (Reuters) - Venezuela's central bank said on Wednesday it sold $215.3 million at an auction of its revamped currency exchange system that closed this week, and Finance Minister Nelson Merentes separately said auctions will be held every 15 days as the country seeks to boost the flow of dollars.

Merentes said he expects Venezuela's high inflation rate to ease by August, adding that economic growth for the second quarter of this year would be higher than the 0.7 percent rate seen in the first quarter.

The government revamped the currency exchange system, known locally as Sicad, because it wants to boost the flow of dollars to importers and address public complaints about nagging product shortages.

In a statement, the central bank said $180.5 million was allocated to local businesses and $34.8 million to individuals.

Merentes said that at each future auction it was possible that more than the planned amount, $200 million, could be sold.

"There were some problems with the banks, but they have been resolved. ... The important thing is that a lot of people are taking part," he told reporters in Caracas.

Merentes said more than $200 million was sold because an unnamed participant decided to sell greenbacks at the auction.

"We want more companies to sell dollars," he said.

The auction began on Friday and ended on Tuesday; the dollars are due to be paid out this Friday.

The sale was restricted to companies registered in two Venezuelan states and to firms in the automotive and health sectors. Businesses could place orders of up to $1.02 million, while individuals traveling abroad could ask for up to $2,500.

Officials say other sectors and states will be addressed in future auctions. Sicad, which operates in parallel with a decade-long currency control mechanism, will provide dollars at a higher rate than the official exchange rate of 6.3 bolivars.

Businesses have complained for months that lack of access to hard currency has stopped them from importing consumer staples ranging from wheat flour to toilet paper.

Venezuelan President Nicolas Maduro, who won an election in April after the death of longtime leader Hugo Chavez, faces a raft of economic challenges, including slowing growth, rising consumer prices and nagging shortages of consumer goods.

The 0.7 percent growth rate in the first quarter marked a sharp slowdown from the 5.9 percent expansion posted in the same period in 2012. Monthly inflation slowed to 4.7 percent last month, down from 6.1 percent in May, but the annual rate rose to almost 40 percent.

Merentes offered an optimistic view on the economy, saying that inflation "is decelerating."

"We are going to see better results." he added. "Given this panorama, one cannot say we are facing stagflation."

He declined to give an estimate for the annual inflation figure.

"Inflation is trending downward ... we hope July will be better, and that in August we will have normal levels," Merentes said.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.