Skift Take

Observers hoped that Chavez' death would get Venezuela back on track, but instead it's become a parody of itself. It's like a Cuba that doesn't understand it has problems.

Venezuela announced a new exchange rate on Monday of 11.3 bolivars per dollar that tourists can use to change up to $10,000 cash a year, part of a week-old revamp of currency controls aimed at undermining a rampant black market.

On Dec. 16, President Nicolas Maduro’s government said it was expanding the use of a complementary currency auction system, Sicad, meaning fewer transactions would be carried out at the official rate of 6.3 bolivars.

Economists – many increasingly critical of the authorities’ economic policies in the face of 54 percent annual inflation – say the revamp amounts to a partial or disguised devaluation.

The new tourist rate was posted on the Central Bank’s website on Monday. Officials said last week that the tourist rate could change again in the future, based on the results of the weekly dollar auctions for businesses and individuals.

The broader revamp of the currency controls, which were set up a decade ago by Maduro’s predecessor Hugo Chavez, means dollars from tourism, oil investments, and the central bank’s gold purchases will now be handled by Sicad, which will give those sectors a more favorable rate than the 6.3 level.

State currency control agency Cadivi sells dollars at the official rate of 6.3. But greenbacks fetch more than 10 times that on the black market as delays and restricted access to Cadivi leave businesses struggling to pay offshore providers.

The Sicad system was created in early 2013 to sell dollars at a rate that has not been officially disclosed but is believed to fluctuate in different auctions at around 12 bolivars.

(Reporting by Daniel Wallis and Diego Ore; Editing by Bob Burgdorfer)

Tags: money, venezuela

Photo credit: View of Caracas, Venezuela. Roman Emin / Flickr