Venezuelan currency enters free fall mode

[brooklynite]

Source: Financial Times

Venezuela's currency is entering free fall mode.

Having tumbled beyond the 500 per dollar mark in the black market at the start of the month, and then the 600 mark just eight days later, the bolivar is now within sight of crashing through the 700 barrier.

The so-called bolívar "fuerte" - or strong bolivar - hit a new low of 683.26 per dollar on the black market on Monday, according to dolartoday.com, the rate tracking website that has become the unofficial reference for checking the Venezuelan currency.

This means the bolivar's value on the black market is now less than a hundredth of the main government rate of 6.3 bolivares to the dollar - and underscores the growing inability of Nicolas Maduro, Venezuela's president, to stabilise the country's fast deteriorating economy.

Read more: http://www.ft.com/fastft/366271/venezuela-bolivar

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No doubt the CIA again?

[Calista241]

1. We should just blame it on Bush.

And maybe Exxon. Someone evil did it, that's for sure.

[Perseus]

8. Fidel Castro did it...Only thing you can blame on Bush is inactivity

but then again, his mind was occupied on something else, and I don't think he can have two thoughts at the same time...anyway, his inability to understand international issues could not allow room for his administration to think of the consequences...Obama hasn't done much either, many Venezuelans had high hopes that the Obama administration would do something, but no...it did not happen.

Cuban economy, although not for the people, has benefited from the Chavez regime as the goal was to "own" Venezuela and divert money to the island. Maduro is just a puppet of the Castro regime, unless Venezuelans get rid of these people, nothing will change for the better, it will just continue spiraling down.

It is a shame, Venezuela is a very beautiful country and its people are very warm and friendly, it is a very sad situation.

Same thing is happening to Bolivia, Ecuador, I don't know if I am right in saying this but the USA has underestimated the power of the Castros.

[roamer65]

2. Reminds me that I'm still a trillionaire in Zimbabwe.

And it took only one currency note to do it!

[geek tragedy]

3. Maybe Greece should adopt the bolivar as its currency. nt

[trillion]

4. I don't understand this. The piece keeps saying "black" market. If it's from illegal trading why

would they honor it?

[NobodyHere]

5. Because they're still dealing in dollars and bolivars?

[hack89]

6. The government tightly controls acesss to "official" dollars

And few people or business can get those dollars. So they buy black market dollars.

[Perseus]

7. Its not that they are honoring, what is happening is...

The government has a stronghold on the sales of dollars, the only real way that citizens there can get their hands on the dollar is through the black market. Also, the government limits how many dollars people can buy when they travel abroad, I believe what a single person can buy today is only about $750.00, so if you are coming to the USA for two weeks, you have to do miracles to spend that time with that much in USA $$$.

When a Venezuelan needs to buy car parts, or anything today they cannot find there, which is almost anything, they have to calculate their expense in black market dollars.

This is a scam that people in the Chavista government cooked out many years ago...they have access to government dollars, they buy as many as they want for 6.30 Bs, then they sell it in the black market for what ever the value is, and boom...they make a ton of money.

And as one poster pointed out "blame it on Bush", the one thing that can be made to accuse Bush of anything happening in Venezuela was his inactivity in preventing the chaos that country is in, but then again Obama hasn't done much either...It is a puzzle to me why USA did not do anything to prevent what has become of Venezuela and many South American countries pushed to a communism by the Cubans.

[melm00se]

9. As far as I know

every time a country has placed a bottleneck on buying and selling foreign currencies, black market trading has quickly sprung into being.

I remember back in the 1980's when I visited the DDR: the "official" exchange rate was 1 East German Mark for 1 US dollar (which, BTW, was enforced by requiring that ALL currency on your person was to be exchanged for East German Marks as you passed through passport control). The non-DDR enforced exchange rate (on the other side of the Berlin Wall) was 20 or 25 to 1 and the black market in exchange rate in the DDR itself was more than double that (as the punishment for having foreign currency in your possession was a criminal offense with significant punishment).

The one thing about a black market (especially in highly controlled economies) is items are traded closer to their "true" value rather than one that is enforced (usually) by government.

[brooklynite]

10. I remember that well...

My wife and I were visiting East Berlin on a day trip and I purchased some black market Ost-Marks in the west, and smuggled them in in the handle of my umbrella. We couldn't for the life of us spend them all, so we smuggled the remainder back out in my shoe.

[melm00se]

11. neither could we

(there wasn't anything to buy that wasn't crap) so we collected them all together can gave them to a little kid.

At the time, the DDR currency was aluminum and if the wind was blowing, you had to keep your coins from being blown away.