Venezuela inches toward new forex platform
CARACAS (Reuters) - Venezuela unveiled currency regulations on Tuesday to help usher in a new foreign exchange platform to combat black market trading, promising the much-delayed system would start in coming days.
The Sicad 2 platform adds a third exchange rate to the country's 11-year-old currency controls that sell dollars at 6.3 bolivars for preferential goods and around 11 for other items.
Officials say it will help lower the price of dollars on the black market, where greenbacks now fetch close to 80 bolivars.
"The first day of operations will be Thursday," said Vice President Jorge Arreaza during a televised meeting with representatives of the agriculture sector.
Economy Vice President Rafael Ramirez had previously told reporters that the platform would start functioning "in the coming hours." He declined to provide details on the amounts likely to be offered or the expected exchange rate.
The central bank will publish instructions outlining the practical details of the platform including details of operations and technology details, according to the regulations published in the Official Gazette.
Dollars can be offered in cash or bonds via Sicad 2 at a price above the other two rates, but below the roughly 80 bolivars that dollars currently fetch on the black market.
The platform would operate daily, with transactions to be completed within 48 hours of a deal.
Both businesses and individuals can participate in the system, which will operate alongside existing currency controls.
(For a link to the Official Gazette, see: here#page=8)
The black market is seen as one of the primary drivers of inflation, which hit 56 percent last year and helped spark opposition protests that have dragged on for close to a month.
Finance Minister Nelson Merentes said inflation for the month of February was lower than the 3.3 percent registered in January, but did not offer the figure.
The black market rate has steadily strengthened over the last week after reaching nearly 90 bolivars as businesses have became more optimistic they will be able to buy dollars more affordably through Sicad 2.
The central bank will publish the daily price average, and may intervene to avoid "erratic fluctuations."
State oil company PDVSA PDVSA.UL, which earns about 95 percent of Venezuela's foreign revenues, will be allowed to participate in the market.
Private exporters will be allowed to keep 60 percent of the hard currency they earn, addressing a long-standing complaint of business leaders that exporters had been required to hand over dollars at the unfavorable official rate.
Sicad 2 takes its name from the Spanish acronym for the Complementary Foreign Exchange Administration System.
The country has suffered chronic shortages of basic goods ranging from toilet paper to corn flour as importers struggle to obtain the dollars they need.
The government last month reformed the Exchange Crimes Law to allow businesses and individuals to take part in foreign exchange transactions, which had been previously reserved for the central bank.
Critics say soaring inflation and product shortages are signs that the state-driven model of economics created by late socialist leader Hugo Chavez is running out of steam.
President Nicolas Maduro says speculators and saboteurs are carrying out an "economic war" against him.
(Reporting by Deisy Buitrago, Esteban Israel and Eyanir Chinea; Writing by Andrew Cawthorne and Brian Ellsworth; Editing by Marguerita Choy and Andrew Hay)