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Venezuela Devalues Bolivar By Another 44% For Some, Still 600% Higher Than Black Market Due To 50% Inflation

Tyler Durden's picture





 

Less than a year ago, Venezuela shocked the world when it launched the "first nuke" in the ongoing currency wars (which despite having dropped off the front pages, have certainly not ended), by devaluing its currency, the Bolivar from 4.30 to the USD to 6.30, in the process crushing the profits of many companies that operate(d) in the TP-deprived socialist paradise (which as we reported earlier is about to experience food shortages).

 

Earlier today, Venezuela Oil Minister and Economy Vice President Rafael Ramirez announced on state television that the country just devalued the official Bolivar exchange rate again by another whopping 45%, for some.

Specifically, Venezuelans traveling abroad and airlines will use Sicad FX rate which was last 11.36 bolivars per dollar. Those spared from the most recent devaluation, for now, are students abroad, pensioners, retirees, consular and diplomatic services who will continue using 6.3 bolivars/USD rate. This follows comparable steps taken in late December, when the Bolivar was devalued by the same amount for any non-residents and tourists entering the nation, as the nation unrolled its centrally-planned currency regime in which the Bolivar is offered through a dollar-auction system called Sicad.

The WSJ reported at the time:

Venezuela earlier this year launched a dollar-auction system called Sicad where some importers and tourists could request hard currency at a rate weaker than the official exchange rate of 6.3 bolívares. The government never formally disclosed the exchange rate used in Sicad but local analysts and companies that have participated in the auctions say the rate is close to 12 bolívares per dollar.

 

Venezuela will increase usage of Sicad in 2014 and will deliver $5 billion into the local economy through the system, according to Mr. Ramirez.

 

Still, Wall Street analysts widely expect Venezuela to pull off a full-scale devaluation of its currency in the near-term, a move that would help the government shore up a its finances by capturing more in local-currency terms when it converts dollars earned through oil sales.

Indeed, the reason why today's move is largely meaningless and purely optical, is because there is still an 85% differential between the official rate, and what one can get for a dollar on the black market. Which as the chart below shows is substantially higher, and at last check was 78.38 Bolivars per dollar. Said otherwise, the brand new official exchange rate, which will soon be implemented for everyone, is still 590% higher than the real clearing price of the currency on the black market.

Curious why the currency is crashing so fast? Perhaps ask the 50% (and rising) annual inflation in the socialist paradise.

WSJ chimes in again:

"This new tourist rate is not as compelling as the black market, but it does represent a step in the right direction," Russ Dallen, a partner at Caracas Capital Markets, said in a note to clients.

 

"For my colleagues on Wall Street that come down to Venezuela, now supposedly when you use your U.S. credit cards for expenses, you will get billed at this 11.3 rate, not the 6.3 rate," Mr. Dallen added.

Sadly, for a government seeking to refill its coffers with much needed dollars in order to avoid what soon may be starvation as food distributors don't have dollars with which to pay their vendors, it will have to be far more generous in what it offers those who have the greenback, instead of continuing to encourage the use of the black market, where the money is simply hoarded by enterprising members of the population.

Oh, and for those confused, the reason why the Caracas stock exchange is the best performing stock market in the world in the past year...

... The answer is simple: follow the gray line showing the true "value" of the Bolivar.

 


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Wed, 01/22/2014 - 16:47 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

I wonder how much you could get for gold there?

Venezuela is a place where Bitcoin would be of great value.

 

Buy some gold!  Open a wallet at https://blockchain.info/!

Wed, 01/22/2014 - 16:52 | Link to Comment nope-1004
nope-1004's picture

Anything tangible would work - gold, guns, chickens, ammo....  Entire f'n world is sitting on the edge of the Bernanke cliff.  The asshole wants to print market perceptions, whereas reality and inflation is much more real.  Dumb f'n banker prick.

Yes, I'm mad.  I yearn for some semblance of reality, whereas credit and ZIRP are a fallacy but the cornerstone of todays economy.  And THAT, my friends, is why the Western economy is a total farce.

 

Wed, 01/22/2014 - 16:55 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Maggie Thatcher, Prime Minister of United Kingdom of British once say,

"Socialism is work nice until is run out of other people money"

Boris add, "or run out of printer ink."

Wed, 01/22/2014 - 16:58 | Link to Comment walküre
walküre's picture

This has nothing to do with socialism and everything to do with a Jewish run monetary enslavement of the world. Same as it ever was. I don't pretend anylonger that I should be smarter than every generation before me who had their righteous beef with the moneychangers. They control it, they manipulate it and they will destroy all of us.

Wed, 01/22/2014 - 17:02 | Link to Comment kaiserhoff
kaiserhoff's picture

Abe should get his ass over to Venezuela, and see how some card carrying commies get the inflation thang done.

As Dr. Phil likes to say, "How's that working out for ya?"

Wed, 01/22/2014 - 17:27 | Link to Comment zaphod
zaphod's picture

After Venezuela's system falls and then Argentina's and then Japan's, anyone left holding a bag of useless dollars will have only themselves to blame when the dollar finally goes (but I am sure theKrugman and all other PhDs will claim no one could have foreseen the collapse)

Wed, 01/22/2014 - 17:37 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Maybe solution is break more window in Venezuela for stimulation of local economy.

Wed, 01/22/2014 - 17:55 | Link to Comment zaphod
zaphod's picture

Boris perhaps you are not aware of this, but this was essentially the US government's official policy a few years ago.

Remember "cash-for-clunkers"? It was a government "stimulus" that required dealerships to destroy perfectly usable cars by pouring glass into the engine to seal it. The idea was this would increase demand for car manufacturing. 

I'd argue breaking windows is less environmentally damaging that what the US did. 

Wed, 01/22/2014 - 18:32 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Dear Mr. Beeblebrox,

Boris is no knowledge of "cash-for-clunker". Please illuminate. This is sound like fantastic economic plan for gross usurpation and waste of wealth and industry, is make Soviet era Politburo blush with inadequacy.

Sincerely,

Boris

Wed, 01/22/2014 - 17:06 | Link to Comment Crawdaddy
Crawdaddy's picture

Not jewish - it is jesuit run monetary enslavement.

World Bank: Money Laundering Criminals | Interview with Whistleblower Karen Hudes

http://www.youtube.com/watch?v=c7E9SUwlooE#t=226

Wed, 01/22/2014 - 17:08 | Link to Comment FreeMktFisherMN
FreeMktFisherMN's picture

It's a combination of Zionists and the Vatican and skull and bones/masons. The Catholic church is the whore of Babylon. 

Wed, 01/22/2014 - 17:19 | Link to Comment new game
new game's picture

sense some serious pent up anger, wew, got some myself. now if we could direct it at the above aformentioned syndicates. hmmm. man oh man, don't know where go with cept ii all suck the big blackcock on wall street...

Wed, 01/22/2014 - 19:02 | Link to Comment lakecity55
lakecity55's picture

Let's just agree it's a combination of real assholios!

Wed, 01/22/2014 - 23:02 | Link to Comment Crawdaddy
Crawdaddy's picture

Yes it is and at least 9 people here would rather blame it on an easily picked on ethnicity rather than a system of belief comprised of voluntary members.

Wed, 01/22/2014 - 18:06 | Link to Comment walküre
walküre's picture

Rothschilds are Jews, not Jesuits. Their clan started the modern day paper currency game. 250+ years and going strong. America was built with it and is subsequently ruled by it / them when the Fed was created.

Wed, 01/22/2014 - 19:26 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Rothschild is not Jew, is not Jesuit, is Bower, Khazarian non-Jewish ethnicity. Ukrainian cossack is fight against Khaza since time memorial.

Wed, 01/22/2014 - 16:54 | Link to Comment walküre
walküre's picture

How comfortable do you feel holding cash in your house right now? Anywhere in the world for that matter. Notice how the bankers eliminated cash purchases for many vendors. Yes, the vendors are saying it's their own decision but c'mon we all know who controls the boards.

Venezuela is a good case example. They have oil. Lots of cheap oil compared to heavy land locked oil that requires fracking or the dreadful tar sands up North.

Why is Venezuela selling its oil for Dollars as opposed to taking gold? They're at the edge of a cliff anyway and could pull that card at this point in time to help end the currency debauchery by the Jews and the revaluation of real money for the benefit of everyone else.

Wed, 01/22/2014 - 17:11 | Link to Comment new game
new game's picture

dude, i get vertigo just thinking about the edge! please not the edge!

Wed, 01/22/2014 - 19:36 | Link to Comment economics9698
economics9698's picture

If the president of Venezuela mentioned a gold or silver standard he would be dead in 24 hours.  The NYC assholes have controlled that country since 1973.

Wed, 01/22/2014 - 17:29 | Link to Comment NotApplicable
NotApplicable's picture

Socialists are not allowed to speak of the specie, except in utter contempt.

Or for urinal design.

Comrade

Wed, 01/22/2014 - 17:35 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Copper and beets.

Wed, 01/22/2014 - 18:09 | Link to Comment homiegot
homiegot's picture

Lamborghinis and art.

Thu, 01/23/2014 - 19:05 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Boris is not understand... what is connection of pasta and art?

Wed, 01/22/2014 - 18:12 | Link to Comment homiegot
Wed, 01/22/2014 - 18:53 | Link to Comment MisterMousePotato
MisterMousePotato's picture

American Brilliant cut glass.

Wed, 01/22/2014 - 17:35 | Link to Comment Millivanilli
Millivanilli's picture

Long ... toilet paper.

Wed, 01/22/2014 - 20:17 | Link to Comment Mugatu
Mugatu's picture

Venezualans actually use used cars as the major store of wealth.  Gold can be stolen and resold, but reselling cars with their accompanied size and VIN numbers is tougher.  The price for most used cars is actually higher than their new price right now.

In a lawless society, one must store their wealth in ways that are harder to steal and hide.  In Venezuela, Gold is too easy to steal, hide, and sell.

Thu, 01/23/2014 - 19:08 | Link to Comment Boris Alatovkrap
Boris Alatovkrap's picture

Boris is once visit Caracus, political and commercial capitol of Venezuela. Many citizenry are live in house of stack brick and corrugated tin roof. Boris is not recommend put money in house as house is easy to steal, brick by brick.

Wed, 01/22/2014 - 16:47 | Link to Comment Shrapnel
Shrapnel's picture

Cue BTC

Wed, 01/22/2014 - 17:12 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Cue everything on this list.

Item 2

Develop a basic mindset.  Here are some ideas.  Commit to prepare for zombies, so that currency collapse, EMP, hurricanes, revolution, world war, or anything else will seem relatively mild. 

Wed, 01/22/2014 - 17:22 | Link to Comment Sudden Debt
Sudden Debt's picture

any real asset besides real estate would give them a edge

Wed, 01/22/2014 - 16:50 | Link to Comment pods
pods's picture

Sad that they just cannot put down the spade.

I am sure that the US had a hand back in Chavez' early days stirring the pot.  Now, I think they look and figure they cannot make it any worse.

Really sad that people double down on stupid.  

pods

Wed, 01/22/2014 - 16:56 | Link to Comment Ignatius
Ignatius's picture

My bet would be that the CIA is still there working their magic.

Thu, 01/23/2014 - 07:55 | Link to Comment StandardDeviant
StandardDeviant's picture

Aw, hell, I don't know about the CIA, but +1 just for getting "there" and "their" correct.  It's refreshing to see; it really is.

Thu, 01/23/2014 - 12:57 | Link to Comment lasvegaspersona
lasvegaspersona's picture

They're still doing that?

Wed, 01/22/2014 - 16:54 | Link to Comment Spungo
Spungo's picture

Krugman's policies appear to be working in Venezuela. They hit that target inflation and then some.

Wed, 01/22/2014 - 17:41 | Link to Comment SeattleBruce
SeattleBruce's picture

Even as self focused as krugman is, do you think he'll take credit there?

Wed, 01/22/2014 - 16:59 | Link to Comment youngman
youngman's picture

Keep an eye on how people survive in this kind of an economy...it will be good to lean this skill...as it might be needed in the future...

Wed, 01/22/2014 - 18:09 | Link to Comment XitSam
XitSam's picture

Study Argentina

Wed, 01/22/2014 - 18:59 | Link to Comment lakecity55
lakecity55's picture

......yeah, like maybe next week the way things are going.

Thu, 01/23/2014 - 13:04 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Ferfal wrote a book on how the Argentinians survive. They have the most experience with shitty currency. The Bolivians, Mexicans, Romanians, Yugoslavs, Russians (and a few satelites) have a good deal too if you find one over age 30.

Of course when the dollar has its day the whole world will want to know the tricks of that trade.

'A whore in the bedroom is better than a dead baby in the crib'...old Weimar saying...

Wed, 01/22/2014 - 17:05 | Link to Comment akak
akak's picture

I bet Ben Bernanke is positively green with envy.

Wed, 01/22/2014 - 17:06 | Link to Comment Rising Sun
Rising Sun's picture

Hey Krugman, how's this for socialist utopia?

KRUUUUUUUUGMAAAAAAAAN!!!!!

Wed, 01/22/2014 - 17:08 | Link to Comment akak
akak's picture

I hear he is quite favorable to the Venezuelan currency developments, but is still waiting to see more broken windows.

Wed, 01/22/2014 - 17:43 | Link to Comment SeattleBruce
Wed, 01/22/2014 - 17:07 | Link to Comment new game
new game's picture

zimbozuela bitcheez

Wed, 01/22/2014 - 17:12 | Link to Comment max2205
max2205's picture

Nflx must be listed on the Venz exchange

Wed, 01/22/2014 - 17:25 | Link to Comment pashley1411
pashley1411's picture

What exactly is the difference between Venezuela, and, for example, Abenomics, or the Bernanke-ink-hose?   

Venezuelans who devalue the exchange value of their currency are, arguable, more realistic than the American or Japanese sheeple, who have yet to cotton on to how the currency in their wallets is a rapidly diminishing fiction.

Wed, 01/22/2014 - 21:19 | Link to Comment SeattleBruce
SeattleBruce's picture

"more realistic" - except they think the USD have some inherent value.  Perhaps relatively speaking, and for a short while longer...

Wed, 01/22/2014 - 17:17 | Link to Comment Jeepers Creepers
Jeepers Creepers's picture

Remeber, this is what the Pope wants.  A system of government that stamps out the gap between rich and poor.  Just look at what an Utopia has been created pursuing this noble goal.

Wed, 01/22/2014 - 17:59 | Link to Comment css1971
css1971's picture

Well isn't this accelerating the gap?

A system of government which reduced the gap between rich and poor would be one which was going for gradual deflation, not inflation. Already implemented in Japan...

http://thinkprogress.org/politics/2010/07/08/106536/japanese-ceo-america...

 

Wed, 01/22/2014 - 17:18 | Link to Comment One And Only
One And Only's picture

"Still, Wall Street analysts widely expect Venezuela to pull off a full-scale devaluation of its currency in the near-term, a move that would help the government shore up a its finances"

Shore up it's finances?

When everyone takes and no one produces there are no finances...

HELLLLLOOOOOO.....MCFLYYYYYY....Think Mcfly.

http://www.youtube.com/watch?v=kh9PYtmVybU

Hellooooooo Obamaaaaa. Think Obama....Think.

Wed, 01/22/2014 - 17:26 | Link to Comment delivered
delivered's picture

The emerging economies look very messy right now.

Venezula's economy is a mess. Ukraine's economy/political system is a mess. Turkey's economy/political system is a mess. Thailand's political system is a mess (most likely economy to follow). Argentina's economy/political system is a mess. China holding it's breath on a 1/2 billion $ shawdow banking default set for 1/31 combined with slowing growth and $20+ trillion in excessive debt. For those wondering, Mexico's border with the US now has a third party involved in their drug battle - vigilantes (battling both government troops and drug cartels). India's currency was hammered last year and had to resort to capital controls to prohibit gold imports. Now Pakistan is having to deal with the issue via record smuggling of gold to India. Russia should be interesting with upcoming Olympics as with a $50 billion price tag, any security failures will be a huge blackeye. 

Just a sampling of what is happening in the emerging markets which of course makes the developed markets look great in comparison. Hard to believe it has come to this as with Italian and Spanish bond yields dropping faster than Obama's approval rating, the final sign is upon us. STUPID money has now fully entered the market. 

Wed, 01/22/2014 - 17:32 | Link to Comment Son of Loki
Son of Loki's picture

Devaluation..coming soon to a Fiat near you.

Wed, 01/22/2014 - 17:53 | Link to Comment lynnybee
lynnybee's picture

Stockpile everything, people!

Wed, 01/22/2014 - 18:01 | Link to Comment homiegot
homiegot's picture

Free electronics for everyone! Capitalist pigs!

Wed, 01/22/2014 - 18:19 | Link to Comment no more banksters
no more banksters's picture

“Venezuelan, European, and U.S. mass media feature stories of popular frustration, even anger. Worried Maduro partisans recall Chilean distress prior to the U. S. supported coup that removed President Salvador Allende in 1973. The Nixon administration wanted then to “make Chile’s economy scream.” A statement from 45 high-level retired Venezuelan military officers calling for military intervention testifies to high stakes in play now.”

http://failedevolution.blogspot.gr/2013/11/neoliberal-dictatorship-threa...

Wed, 01/22/2014 - 18:57 | Link to Comment lakecity55
lakecity55's picture

"Bathouse, dear, what are you reading so intently?"
" A book on Currency Devaluation, Reggie! Before I leave office, if ever, Venezuela will look wealthy to Americans, hahhaha!"

Wed, 01/22/2014 - 19:36 | Link to Comment NoWayJose
NoWayJose's picture

And does anyone want to bet which country has more unencumbered physical gold sitting in their vaults? Venezuela or Amerika?

Wed, 01/22/2014 - 19:58 | Link to Comment Carl Popper
Carl Popper's picture

We are getting to watch Atlas Shrugged in real time.  

 

Who dares carry any official inventory if the government is going to tell you to sell everything out of your store at a 50 percent discount?  

Wed, 01/22/2014 - 23:30 | Link to Comment Schaublin
Schaublin's picture

Well.

 

 

Venezualans actually use used cars as the major store of wealth.  Gold can be stolen and resold, but reselling cars with their accompanied size and VIN numbers is tougher.  The price for most used cars is actually higher than their new price right now.

In a lawless society, one must store their wealth in ways that are harder to steal and hide.  In Venezuela, Gold is too easy to steal, hide, and sell.

 

Does not compute.

 

Lawless society - expensive car(s) as a store of wealth? Oh, I get it, you bury them in the back yard and wait until everything is back to normal - good plan.

 

 

 

Thu, 01/23/2014 - 04:29 | Link to Comment QEsucks
QEsucks's picture

@h_h. "Cue everything on this list." Thanks again.

Thu, 01/23/2014 - 04:51 | Link to Comment Tall Tom
Tall Tom's picture

Long Oil Futures. Long Unleaded Gas. When Nations go hungry they overthrow the Ruling Government. The upcoming Civil War in Venezuela will slow or stop Oil Exports to Moarth America.

 

MOAE WOAR. NEED MOAR...NOT ENOUGH. NEED MOAR. MOAR WOAR. MOAR WHOAR..MOAR..MOAR...MUST HAVE MOAR.

 

The current Ruler is running out of time.

 

Upheaval, internal instability and a following revolution will result.

Sat, 01/25/2014 - 09:06 | Link to Comment MGA_1
MGA_1's picture

well.. looks like we have the first candidate for hyper inflation....

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