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Venezuela may slowly move toward open currency market -report
April 3, 2014 / 3:05 PM / 3 years ago

Venezuela may slowly move toward open currency market -report

CARACAS, April 3 (Reuters) - Venezuela may move toward an open currency market after more than a decade of exchange controls, a legislator with the ruling Socialist Party said in an interview published on Thursday.

The government of President Nicolas Maduro last month opened a new currency platform meant to boost access to dollars amid product shortages and import bottlenecks that have stymied the OPEC nation’s economic growth.

“The trend in the medium and long term could be that we have an open market for currency without the application of an exchange rate anchor,” said legislator Ricardo Sanguino in an interview published in local newspaper El Mundo Economia y Negocios. He did not elaborate.

A finance ministry official said the minister was not available to comment on the issue.

The new Sicad 2 currency market has created a third official exchange rate under the currency control regime, which was created by Hugo Chavez in 2003 and is often seen as the cornerstone of the late president’s state-led economic model.

The government sells dollars at 6.3 bolivars for preferential goods such as food and medicine, at about 11 for other goods, and at close to 50 under the Sicad 2 system, while the black market rate is now around 66.

Business leaders complain Sicad lacks transparency and worry it will not provide a steady source of hard currency.

The announcement of its launch led to a strengthening of the bolivar on the black market, but it weakened again after operations began.

Maduro’s government has promised to make the exchange controls more flexible but has also said it plans to maintain them. (Reporting by Brian Ellsworth Editing by Girish Gupta and Lisa Von Ahn)

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