Has oil-rich Venezuela run out of money?

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It’s difficult to keep track with the will-they-won’t-they economic manipulations of the bolivar currency rate in Venezuela.

Although the nation is one of the world’s richest, with huge untapped oil reserves ready and waiting to fund government spending, how the economy is handled is a cause of concern.

The government promised not to devalue the bolivar against the US Dollar for seemingly no good reason other than froth and bluster.

Then, last month a new exchange rate mechanism was triggered aimed at bringing the black market dollar price into line with the official exchange rate.

Many doubted the resolve of the politicians to deliver, but against all odds they did.

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The rates equalised – from the previous 67 bolivars to the dollar on the black market against the official rate of 6.3 against the dollar to 52 bolivars for a dollar.

The overall effect was an apparently unintended 725% devaluation of the bolivar.

The problem is, the rate may have switched about with some help behind the scenes from the government, seems to be going nowhere.

Currency experts suggest that the devaluation has no point unless the government makes more US dollars available in Venezuela.

And the suspicion is that the money is just not there, which shows the economy is in a shambles, oil or not.

Precious metals lose their shine

Other countries in currency trouble are Ghana and Zambia.

Plunging copper prices, one of the main exports, have seen export revenues slide and undermine the currency, the kwacha.

The central bank and government have tried to support their currency by pulling up interest rates and bolstering the exchange rate on foreign markets to no avail with inflation running at 7% and rising.

Ghana has similar problems, but this time the falling price of gold on international markets is causing the problems.

The government is battling increasing trade and budget deficits as revenue falls and inflation has hit 14%.

Russian roulette

Unsurprisingly another country facing currency problems is the Ukraine.

Political uncertainty, what amounts to an invasion by the Russians, and higher energy prices forced on industry and householders by Moscow hiking gas prices by 30% overnight are all leading to economic problems.

A lack of foreign reserves as businesses and the wealthy move their money to somewhere safer are not helping either. Many believe economic collapse is just a matter of time.

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