On the black market Friday, the Bolivar of Venezuela reached its lowest value against the U.S. dollar. This is being looked at by experts and analysts as a worsening greenback shortage sign faced by the government of President Nicolas Maduro.
A Bolivar currency’s sinking rate of 100/US dollar in the ‘parallel’ market is giving the country’s president headaches. According to Pres. Maduro, investors drive their currency down unrealistically.
Not enough dollars, which is reflected with the mounting debts that Venezuela has with private firms like importers and airlines that provide service in the country, have sparked possible default concerns given that Venezuela has a bond payment due over the next three months, that’s more than $6 billion.
The traders who don’t get access to dollars in the official rates under Venezuela’s currency controls went ahead and used the black market while the local businesses looked at it as an indicator to set prices even it’s not really official.
The weakening of Bolivar has resulted in some analysts’ noting that the famous name given to the currency as ‘Strong Bolivar’ in 2008 is very ironic given its current situation.
It’s not likely for the Venezuelan government to make large devaluation that will have a lot of impact in the demand for imports and dollars. What this means is that the high demand for sensitive goods will persist.