Economics &
Finance
Venezuela to auction dollars weekly
to fight shortages
Venezuela will increase the sale of dollars by starting
weekly auctions in a bid to arrest the decline of the Bolivar on the black
market and boost imports amid shortages of everything from toilet paper to
chicken. The government will sell U$D 900 million in the coming weeks through
an auction system that charges buyers more than the official exchange rate,
says President Nicolas Maduro. Restricted dollar supplies have crippled imports
in a country that buys 70% of its goods from abroad. The shortages have pushed
inflation in the past twelve months to almost 50% and caused the Bolivar to
lose 60% of its value against the dollar in the black market this year. The
dollars will “complement any need the
economy may have” through the end of the year, Maduro said, adding that he
is revising the entire system of foreign exchange controls. The government will
auction at least U$D 100 million a week, Maduro said, clarifying his earlier
remarks that the government would sell U$D 900 million a week. "U$S $100 million a week is nothing,”
says Russ Dallen, of Caracas Capital Markets in Miami, referring to previous
supplemental currency systems closed by the government that sold as much as U$D
100 million a day. Venezuela’s international reserves have dropped to U$D 22.1
billion, the lowest level in almost nine years, according to data compiled by
Bloomberg. “I don’t think this will
increase the offer of dollars,” says BARCLAYS Plc analyst Alejandro
Grisanti. “Instead, they’ll stop
delivering one way to assign through SICAD at a higher price than the official
dollar.” “The decision has a positive fiscal impact, but it will not dampen the
demand for foreign currency, nor lower the price of the dollar on the black
market,” says Asdrúbal Oliveros, director of Caracas-based consultancy
ECOANALITICA. Maduro has requested special powers from the National Assembly,
and may use the decree powers to enact new foreign exchange laws, according to
National Assembly Finance Committee president Ricardo Sanguino. Vice President
Jorge Arreaza says the official exchange system known as CADIVI needed to be
restructured, and National Assembly President Diosdado Cabello said "capitalism" has damaged the
country’s currency controls. “This is clearly too little, too late and
obviously meant as a campaign gambit for the December municipal elections,”
Dallen said, referring to the expanded dollar auctions. Annual inflation in
Venezuela quickened to 49.4% in September, the highest rate among the 112
economies tracked by BLOOMBERG. The central bank’s scarcity index rose to 21.2%,
meaning that one of every five staple goods were out of stock last month. (Bloomberg,
http://www.bloomberg.com/news/2013-10-10/venezuela-will-sell-dollars-every-week-to-fight-import-shortage.html)
Government likely to cut US dollars
sale to private sector
According to financial sources, this time the government
plans to reduce the sale of US dollars to private entrepreneurs, and will
establish a new agency to manage the country's imports for this purpose.
According to Planning Minister Jorge Giordani, only the imports the domestic
economy actually needs will be made. Once such goods are imported, they will be
sold to certain companies in bolivars. (El Universal, 10-10-2013; http://www.eluniversal.com/economia/131010/venezuelan-govt-likely-to-cut-us-dollars-sale-to-private-sector)
Another exchange adjustment is
coming soon, according
to ECOANALÍTICA Director Asdrúbal Oliveros. He adds that the new exchange
system could be in place in December, establishing two or more parities. He
says this implies an additional devaluation which could keep the VEB 6.3 rate
for priority imports and another around VEB 10-11 to the U$D for the remaining
imports, remittances and travel. He believed the dual system seeks to favor
PDVSA, which can "liquefy costs
through a higher FOREX rate, auctions or bond sales". More in Spanish:
(El Universal, http://www.eluniversal.com/economia/131011/preven-otro-ajuste-del-tipo-de-cambio-en-los-proximos-meses; El Mundo, http://www.elmundo.com.ve/noticias/negocios/consumo/-el-estado-como-comercializador-busca-desplazar--a.aspx)
Food prices are up more than 70%
from last year, according
to data released by the Central Bank. September food prices rose 5%, for an
accumulated 50.9% increase year to date in 2013. More in Spanish: (Ultimas
Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/alimentos-cuestan-70-mas-que-el-ano-pasado.aspx#ixzz2hPSZp1Dv; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/precio-de-los-alimentos-subio-70--en-los-ultimos-1.aspx)
ECLAC: Foreign investment in
Venezuela grew 44% during the first semester 2013
According to the UN Economic Commission for Latin America and the
Caribbean, foreign direct investment in Venezuela grew 44% during the first
half of 2013, up to U$D 2.736 billion from U$D 1.897 billion the previous year.
Venezuela experienced the 2nd highest economic growth, after Mexico, in the
region. More in Spanish: (AVN; http://www.avn.info.ve/contenido/cepal-44-creci%C3%B3-inversi%C3%B3n-extranjera-venezuela-primer-semestre-2013;
El Universal, http://www.eluniversal.com/economia/131011/repunto-en-venezuela-la-inversion-extranjera-directa;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/crecio-la-inversion-extranjera-en-venezuela.aspx)
Commodities
PDVSA reported a failure in gas supply to Zulia state, after a gas pipe in the Maicao
Municipality in Colombia was blown up by Colombian guerrillas on Wednesday
morning. The state oil company said a contingency plan has been activated. (Veneconomy, 10-10-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36687&idc=4; El Universal, http://www.eluniversal.com/economia/131009/farc-blamed-for-attack-against-gas-pipeline-serving-venezuela)
PDVSA has leased two secondhand SUEZMAX
tankers from Greek broker
State oil company PDVSA has leased two secondhand oil
tankers owned by a Greek broker, maritime sources said on Wednesday, and it
plans to rent another two SUEZMAXES for its aging fleet which urgently needs
vessels for long distance routes to Asia. PDVSA and Venezuela's official news
agency said the first tanker, the Rio Arauca, which arrived in Venezuelan
waters on Friday, came directly from the dockyard. But the vessel's
registration documents show it is owned by Horizon Tankers, a company based in Greece.
(Reuters, 10-09-2013; http://www.reuters.com/article/2013/10/09/oil-venezuela-tankers-idUSL1N0HZ0XV20131009)
Authorities and SIDOR workers reach a deal
The president of the Guayana Corporation (CVG), Carlos
Osorio, has announced that government and workers at Venezuela's largest steel
producer SIDOR agreed a payment schedule to meet commitments for collective
bargaining, and that operations have resumed there after a 22-day strike.
"Today we arrive happily at the end
of this situation. After several working meetings we agreed to pay the arrears
to workers of SIDOR for vacations, working hours, among other things,"
said Osorio on state media. (AVN, 10-09-2013; http://www.avn.info.ve/contenido/govt-and-sidor-workers-reach-deal-meet-work-commitments)
Logistics
& Transport
Authorities are readying steps to meet international air
transportation shortage
Francisco Paz Fleitas, head of
the National Civil Aeronautics Institute (INAC) says an official strategy is
being readied to meet the scarcity of airline tickets to international
destinations, as well as fare increases of up to 300%. The Institute asked air carriers to provide their
cost structures in order to analyze the situation. (Veneconomy, 10-10-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36686&idc=3)
Politics
Nicolás Maduro requests enabling law
for one year
President Nicolás Maduro has asked lawmakers at the
National Assembly to grant him special ruling powers under an enabling law for
one year. Only six months after the presidential election of April 14, Maduro
requested the Parliament to give him special powers to take steps on the
economic model, imposed, he claimed, by the "parasitic bourgeoisie" that continues "living off oil revenues and imports."
(El Universal, 10-09-2013; http://www.eluniversal.com/nacional-y-politica/131009/nicolas-maduro-requests-enabling-law-for-one-year;
Bloomberg, http://www.bloomberg.com/news/2013-10-09/venezuela-s-maduro-seeks-new-decree-powers-for-economic-war-.html;
Fox News, http://www.foxnews.com/world/2013/10/08/venezuelan-president-nicolas-maduro-asks-lawmakers-to-give-him-power-to-rule-by/;
More in Spanish: CNN, http://cnnespanol.cnn.com/2013/10/08/maduro-solicita-poderes-especiales-para-combatir-la-corrupcion/?iref=allsearch)
Venezuela, Paraguay work to restore
ties
Foreign Minister Elías Jaua and his Paraguayan
counterpart Eladio Loizaga have met in Paraguay to discuss the resumption of
Venezuela-Paraguay relations. (El Universal, 10-09-2013; http://www.eluniversal.com/nacional-y-politica/131009/venezuela-paraguay-work-to-restore-ties;
http://www.eluniversal.com/nacional-y-politica/131009/paraguay-hopes-to-improve-diplomatic-relations-with-venezuela)
Elections Board chief exhibited a
purported copy of Maduro's birth certificate
During a press conference, Elections Board head Tibisay Lucena claimed Nicolás
Maduro "met all requisites"
in order to be a candidate in the April 14th elections and displayed documents
that she claimed are copies of his certified birth certificate. She dismissed
allegations that he was not born in Venezuela. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/131011/lucena-asegura-que-maduro-nacio-en-la-candelaria)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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