July 26, 2013 / 9:27 PM / in 4 years

Venezuela central bank to sell $180 mln in forex auction

CARACAS, July 26 (Reuters) - Venezuela’s central bank said on Friday it would auction $180 million under its revamped currency exchange system known as Sicad, part of an effort to boost the flow of dollars to the economy and ease product shortages.

The third Sicad auction will provide $150 million to businesses and $30 million for individuals, with the central bank receiving orders on Monday and Tuesday.

Corporate participants will be restricted to companies registered in the eastern Nueva Esparta state, home appliance merchants in the western Falcon state, and firms involved in the sale of school supplies, toys and computing equipment.

Individuals can buy up to $2,500 for foreign travel.

Sicad, which operates in parallel with a decade-long currency control mechanism, will provide dollars at a weaker rate than the official exchange rate of 6.3 bolivars.

Government leaders insist Sicad will ease foreign exchange bottlenecks, which private economists describe as one of the reasons for a sharp growth slowdown during the first quarter.

Despite some initial private sector enthusiasm, business leaders complain of unclear criteria for determining winners. They say it does not ensure a consistent supply of currency because companies do not know in advance if their industry will be able to participate.

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