Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, July 26, 2013

July 23, 2013

Economics & Finance

Revamped dollar auctions seen as insufficient
Authorities last week reintroduced an exchange mechanism, SICAD, with a sale of U$D 215 million - complementary to the larger foreign exchange agency CADIVI. The government hasn't released information on the winning bids, but experts estimate that dollars were allocated at an exchange rate of 11 bolivars per U.S. dollar - significantly more than the official exchange rate of 6.30 bolivars to the dollar, but far from the black market price that has slid to over 30 bolivars per dollar. Alejandro Grisanti, a Barclays analyst, says the rate "demonstrated the government's strong resistance to letting the currency depreciate." Central bank officials, who managed the auction, said a price range was established and bids above or below the range were disqualified. It wasn't clear how the rate was established. Auctions are to be scheduled for every two weeks, offering roughly U$D 200 million each time. "The improvisational style makes it difficult to understand the operational aspects of SICAD," says Siobhan Morden, head of Latin America strategy at Jefferies & Co. "The lack of transparency doesn't help either as officials are not publishing the FX clearing rate or perhaps more importantly, explaining how they are sourcing the USD funds for these auctions." (The Wall Street Journal;

Public believes SICAD will not meet US dollar demand
89.4% of readers in a survey by El Universal daily say the Ancillary Foreign Currency Administration System (SICAD) will not slow demands for foreign currency.  46.75% said this is due to insufficient US dollars while 42.64% say FOREX will be sold arbitrarily. Only 10.6% feel SICAD will actually provide enough foreign currency to satisfy demand from tourism and students living abroad. (El Universal, 07-22-2013;

U$D 400 million may be available for Venezuelan companies to repay foreign debt
Official reports show that in January-May this year, the Central Bank of Venezuela authorized some U$D 400 million that "could be used to offset accrued liabilities from the public and private sectors." (El Universal, 07-22-2013;

Drop in international reserves endangers frequency of SICAD auctions
A drop in FOREX contributions by PDVSA, the state oil company, to Venezuela's Central Bank has brought international reserves down by 20%, which will make it difficult to increase the number of auctions by SICAD. According to Central Bank official data, reserves stood at U$D 23.8 billion, down from U$D 29.8 billion on December 31, 2012. More in Spanish: (El Nacional;


Four Chinese workers were electrocuted at the San Isidro mine in Ciudad Piar, Bolívar state on Sunday. CVG Ferrominera Orinoco issued a press release on the incident today. According to the state company, the Chinese workers were carrying out maintenance work on a Terex truck. (Veneconomy, 07-22-2013;

Warrants of arrest out on former FERROMINERA directors
Following the indictment brought by the Office of the Public Prosecutor, a local court ordered the arrest of three former members of the board of directors of CVG Ferrominera Orinoco C.A., as well as of a representative of MUSZAM Investment INC for alleged involvement in corruption during the leadership of Radwan Sabbagh as president of the state-owned oil company. (El Universal, 07-22-2013;; Veneconomy,


Venezuela angrily halts effort to normalize relations with US after criticism by US diplomat
Venezuela says it’s ending talks with the United States to restore normal relations because Washington’s U.N. ambassador-designate criticized its human rights record. The Foreign Ministry said in a statement that Samantha Power’s remarks compelled it to halt the process begun in Guatemala last month by its foreign minister, Elias Jaua, and U.S. Secretary of State John Kerry. Power said in Senate confirmation hearings Wednesday that Venezuela is guilty of a “crackdown on civil society,” along with Cuba, Iran and Russia. (The Washington, 07-20-2013;

Maduro and Santos agree to re-launch bilateral relations
Presidents Nicolás Maduro and Juan Manuel Santos, of Venezuela and Colombia met for 3 hours in the Amazonas state and agreed to "re-launch" bilateral relations, through "permanent communication" based on respect and cooperation. President Santos said both governments have differences on many matters, but have the obligation to work jointly and will do so. Santos said: "We told each other frankly, there are matters in which we do not agree, we have different visions on many things, but we have the tremendous obligation and responsibility to work together". More in Spanish: (INFOLATAM)

Capriles: LatAm must turn around and see what is happening in Venezuela
During his visit to Perú, Miranda state governor and opposition leader Henrique Capriles has called for solidarity by Latin American countries towards Venezuela. Capriles met with media in Lima and said:
"I do not intend to decide the agenda of the President (Ollanta) Humala, but I do expect an answer (from him), not as President of Peru, but as a brother country. We are supportive with your struggles and we just ask you to be supportive with ours," he said.
(El Universal, 07-22-2013;

Meeting of CELAC ministers starts in Caracas
The meeting of social ministers of the Community of Latin American and Caribbean States started Monday with a recorded speech of late leader of Bolivarian Revolution Hugo Chavez.  (AVN, 07-22-2013;

Supreme Court asked to order Maduro to prove his place of birth
The controversy over President Maduro's nationality does not end. Yesterday a group of lawyers formally asked the Supreme Court to order the President to reveal exactly where he was born and what was his parent's nationality, and said that if it is shown he or his parents are not native Venezuelans it should strip him of his office. More in Spanish: (El Universal;

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.

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