February 10, 2014 / 3:35 PM / 4 years ago

Venezuela sees forex 'swap' market operating this month

CARACAS, Feb 10 (Reuters) - Venezuela this month will set up a new parallel foreign currency exchange platform based on bond swaps to complement two existing mechanisms for dollar sales, the government says.

“It won’t be any later than February,” Oil Minister Rafael Ramirez, who is also vice-president for the economy, was quoted as saying by local media at the weekend.

It “will be more transparent and would allow different public and private players to participate and bring foreign currency in,” he said.

He was answering questions about a currency mechanism known as “permuta,” or swap in Spanish, that the government has been saying for months it plans to set up. It has given few details, though, of how it would work.

Venezuela has operated strict currency controls for 11 years.

A “permuta” system which traded local and foreign bonds as a way of exchanging dollars for bolivars functioned until 2010. Also known as the parallel market, it offered a weaker bolivar- to-dollar rate than the official rate.

Currently, dollars are sold at an official rate of 6.3 bolivars for priority goods, and at 11.3 bolivars for other sectors via the central bank’s Sicad auction system.

Importers complain that restricted access to dollars is hurting businesses and a major factor behind shortages that have been afflicting Venezuela’s 29 million people for the last year.

Ramirez did not confirm if state oil company PDVSA would be allowed to participate in the new mechanism.

The dollar is trading on an illegal black market for more than 80 bolivars.

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