July 12, 2013

Economics & Finance

Central Bank to sell U$D 200 million in FOREX auction, reserves at lowest level this year

Venezuela's central bank has announced it will sell U$D 200 million at auction under its revamped currency exchange system, as the government seeks to boost the flow of dollars to importers and address voters' complaints about nagging product shortages. The bank said that U$D 170 million would be allocated to businesses and $30 million to individuals in the auction under the revamped system, known as SICAD. SICAD operations are starting with international reserves at the lowest level YTD (U$D 24.8 billion as of July 9), without funds from state-owned oil company PDVSA. FOREX is expected to come mainly from the National Development Fund (FONDEN), yet contributions to the Fund have declined as well. (Reuters, 07-11-2013; http://www.reuters.com/article/2013/07/11/venezuela-currency-idUSL1N0FH1DL20130711; El Universal, http://www.eluniversal.com/economia/130711/central-bank-of-venezuela-puts-usd-200-million-for-auction; and http://www.eluniversal.com/economia/130711/sicad-starts-without-pdvsa-and-amid-low-international-reserves)

Annual inflation of 42.7% hits the poorest in Caracas

A hike in food prices and the increase in transport rates seriously hits the poorest families in the Caracas Metropolitan Area. Central Bank statistics on the consumer price index in the area show that inflation in June was 4. 3% for Stratum I population, which are the poorest. In six months, inflation in this segment was 25%, and inflation for the year stands at 42.7%. No similar level has been recorded since September 2008. (El Universal, 07-11-2013; http://www.eluniversal.com/economia/130711/annual-inflation-of-427-hits-the-poorest-in-caracas)

Stock market up 160%

The Venezuelan Stock Market continued to rise again this week closing up 6.90% above its level of last week at 1,229,487. The rise was mainly due to Banco Provincial closing at Bs. 380, 11.76% over its level of the previous week, as well as SIVENSA, up 13.64% at Bs. 25 and Mercantil Servicios Financieros A, up 17.65% at Bs. 400. The biggest gainer though was container-maker Envases Venezolanos which rose 21.43% to end the week at Bs. 170, up from the Bs. 140 at which it closed last week. (Latin American Herald Tribune, 07-09-2013; http://www.laht.com/article.asp?ArticleId=847281&CategoryId=10717)

Commodities

Oil exports to the US dropping in 2013

Venezuelan oil exports to the United States during the first half of 2013 hit their lowest level since the 1990, as the country tries to prioritize clients and allies such as China or India and curb oil shipments to the US.

Preliminary US Department of Energy data shows oil exports to the US in January-June this year were 754,000 BPD, down 8.3% from 823,000 BPD in 2012. The US has cut oil imports from Venezuela from a peak of 13.06 million barrels in 2006 to 10.59 million barrels in 2012, a 18.9% drop. US local oil output rose from 5.07 million bpd in 2007 to an average of 7.18 million bpd in 2013. (El Universal, 07-10-2013; http://www.eluniversal.com/economia/130710/venezuelas-oil-exports-to-the-us-fall-in-2013)

Ramirez says Venezuelan oil sales will not to be hit by Snowden asylum

Oil and Mining minister Rafael Ramirez says granting asylum here to former CIA agent Edward Snowden would not affect the oil market. "There is no way that it affects us. We also have our intelligence service and we know what we are doing and we are advancing," said Ramirez at a meeting with the media in Caracas. (AVN, 07-11-2013; http://www.avn.info.ve/contenido/venezuelan-oil-market-not-be-affected-asylum-measures; El Universal, http://www.eluniversal.com/economia/130711/minister-rafael-ramirez-rules-out-effects-on-venezuela-us-relationship)

OPEC reports 1.35% slide in Venezuelan oil production

According to data from the Organization of Petroleum Exporting Countries (OPEC), Venezuela showed another month of lower crude oil production. OPEC shows Venezuelan oil production in June 2013 stood at U$D 2.77 barrels per day (bpd) of oil, a 1.35% drop from the same month last year. Data directly supplied by Venezuela to the OPEC Secretariat show as well a 0.58% hike in Venezuelan oil production in May-June 2013, from 2.75 million bpd to 2.77 million bpd. (El Universal, 07-11-2013; http://www.eluniversal.com/economia/130711/opec-reports-135-slide-in-venezuelan-oil-production)

PDVSA expanding El Palito refinery

Refinery Manager Jesús Sánchez says PDVSA is about to kick off a project intended to double current output up to 280,000 barrels per day (BPD) at El Palito Refinery, located in Puerto Cabello, central Carabobo state. He says completion of the project is slated for 2016-2017, given the size of the works. "The issue of conceptual engineering is done. Basic engineering is well underway. Some equipment to be delivered in the long term is being procured," he said. (El Universal, 07-11-2013; http://www.eluniversal.com/economia/130711/pdvsa-implements-expansion-projects-in-el-palito-refinery)

Politics

Venezuela says Snowden has still not formally responded to asylum offer

Venezuela has still not received a formal response to its offer of asylum to former U.S. spy contractor Edward Snowden, Venezuelan Foreign Minister Elias Jaua told Reuters on Thursday. "We communicated last week, we made an offer and so far we haven't received a reply," Jaua said on the sidelines of a regional foreign ministers' meeting in Montevideo, Uruguay. Venezuela along with leftist allies Bolivia and Nicaragua have offered asylum to Snowden, who is wanted by Washington on espionage charges for divulging details of extensive, secret U.S. surveillance programs. (Reuters, 07-11-2013; http://www.reuters.com/article/2013/07/11/us-usa-security-snowden-venezuela-idUSBRE96A0SJ20130711; Fox News, http://www.foxnews.com/world/2013/07/11/venezuela-says-snowden-yet-to-reply-to-asylum-offer/)

Peter Wilson: ¡Bienvenido, Señor Snowden!

I see in the press that you're considering asylum in Venezuela. If that's true, I'd like to make you a business proposal. I think you and I could make millions of dollars here using your new expertise on applying for asylum abroad. You'll soon see that there are thousands of Venezuelans who would love to flee and start over in other countries. Long lines of people hoping to snag visas or passports form each morning outside the U.S. and European embassies in Caracas. After you arrive, we could counsel them on the best way to leave. You'll do fine down here, Señor Snowden, and hundreds of thousands of Venezuelans support you and your crusade. But many more down here wonder why you would ever want to come to a country that constantly violates the very principles you're fighting for. (Foreign Policy Magazine)


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.