Oil-rich Venezuela scrabbles for dollars

Julio Ribas suffers from high blood pressure. If only Venezuela's currency were as high, he might be able to afford some medicine for it.

Venezuela is short of drugs, and to buy some from abroad, Ribas needs dollars -- but those are in desperately short supply too.

Ribas is just one of the countless casual victims of the economic crisis in Venezuela, where inflation and anger are rising as the currency falls.

"I put in a request a month ago for $300," the 55-year-old shopkeeper told AFP.

"I want to send them to my daughter who is working in Panama. I need her to buy me my blood-pressure medicine there."

But in the meantime, the value of his bolivars to the dollar has fallen by more than a third.

At the exchange bureau, employee Manuel Guevara tells Ribas he will have to wait up to two months more. No one knows how much the dollar will be worth then.

The weaker the bolivar gets, the more people want to get hold of the stronger US currency because they can buy more with it.

That growing demand drives up the price of dollars and weakens the bolivar even more. It makes Venezuela's scarce food and goods even more expensive.

"They've had this inflation-depreciation spiral now for more than three years," said US economist Mark Weisbrot.

It has been aggravated by a shortage of dollars and the fall in the price of Venezuela's oil exports, said Weisbrot, co-director of the Center for Economic and Policy Research in Washington.

- Black market dollars -

In February, Maduro reformed the state-controlled currency system, loosening state controls on the bolivar.
He maintained the strong fixed rate for essential imports but allowed the rate for other goods to float.

He hoped that would close the gap between that official dollar rate and the black market rate.

But since dollars are so scarce, the black market remains king.

That rate is much higher -- at about 1,000 bolivars to the dollar, it is currently about twice the official floating rate.

But it is the only way Venezuelan citizens and businesses can even hope to get hold of the dollars they need.

Trade Minister Miguel Perez Abad said the bolivar was undergoing a devaluation that would help it "adjust to the economic reality of the country."

For citizens waiting in line to buy rations of basic food and goods, it has driven up prices.

The government last year reported an official inflation rate of 180 percent for 2015. Economists at the International Monetary Fund forecast the rate will hit 700 percent this year.

- Opaque forex dealings -

Venezuelan economist Luis Vicente Leon says February's reforms can correct the imbalances caused by an artificial over-valuing of the bolivar.

But "the problem is that in reality there is no supply" of dollars, said Leon.
"There is an artificial shifting of currency by the central bank, which has set itself a target to devalue the currency."

Economists estimate the bolivar has weakened by 60 percent against the dollar since the February reforms.

The way the exchange rates are being managed is a mystery to some analysts.

"The mechanism, like those before it, is very opaque," Anabella Abadi of the consultancy group ODH told AFP.

"There is no information about how exchange rate decisions are being taken."

The official floating rate is gradually edging closer to the black market rate.

"That is good for the market," Abadi said. "But it is rising for no apparent reason and is applied to a limited range of currencies. That makes it a marginal system."

- Logging on for dollars -

Getting hold of dollars by official means is a long and hard process.
First a customer must register on the exchange bureau's website to request the dollars, Guevara explained. 

After that they may have to wait up to a year, he said. The exchange bureau issues no more than $300 a day overall.

One foreign exchange clerk, who asked not to be named, said he was skeptical about the real impact of the exchange measures.

"It doesn't matter what one bolivar or a hundred bolivars is worth, because there aren't any dollars anyway," the clerk said.

Source: AFP