CARACAS (Reuters) - Venezuela next week will launch a new currency exchange mechanism to replace the DICOM rate, also known as SIMADI, President Nicolas Maduro said late on Monday in a televised speech as the OPEC nation suffers a deep economic crisis.
The oil-rich country currently has two official exchange rates, DIPRO at 10 and SIMADI at 709 bolivars per dollar. On the black market, however, a dollar can fetch more than 3,000 bolivars because official mechanisms do not satiate demand.
“In a process of perfecting the system of collecting, administering and stabilizing the flow of hard currency in Venezuela, we have decided to activate from next week a new model of DICOM,” said Maduro, speaking at the close of an exhibit to showcase Venezuela’s economy called “Expo Venezuela Powerhouse.”
Maduro did not provide the new rate. Currency auctions will be held twice a week, he said.
Previous new exchange mechanisms have failed to curb the weakening of the bolivar on the black market and economists widely say Maduro should be overhauling the creaking socialist model instead of tweaking it.
“So far, what Maduro has said about this ‘new forex scheme’ is more of the same,” said local economist Asdrubal Oliveros on Twitter.
“This new DICOM kicks off in a context where the shortfall of hard currency is between $10-$12 billion. There’s no capacity to increase the supply of dollars.”
Government critics say Venezuela’s complex set of currency controls are at the heart of its worsening economic mess. Millions of Venezuelans are not eating enough due to soaring inflation and shortages.
Maduro blames the problems on an “economic war” waged against his government by the opposition with the help of Washington.
Previous attempts to curb the spread between official and black market exchange rates have failed.
The various acronyms for new official rates - SITME, SICAD, SICAD II, SIMADI, DIPRO and DICOM - have become a joke among critics as the currency falls on the black market.
In the four years since Maduro came to power, Venezuela’s currency has fallen 99.3 percent against the dollar on the black market.
This means that the equivalent of $1,000 in bolivar savings then is now worth just $7.
Reporting by Girish Gupta; Editing by Toni Reinhold, Alexandra Ulmer and Lisa Shumaker
Our Standards: The Thomson Reuters Trust Principles.