Venezuela conducts de facto devaluation

Venezuela’s Finance Ministry sold $200 million on a new secondary exchange system without disclosing the exchange rate for winning bids. The auction awarded dollars to 383 companies, the ministry said in a statement posted on its website. Only companies registered with the Cadivi currency board could participate in today’s auction.

Acting President Nicolas Maduro’s government introduced the new foreign exchange mechanism ahead of an April 14 presidential election in a bid to halt the bolivar’s decline on the black market and reduce shortages of goods in local stores. The bolivar has depreciated 19 percent to about 23 bolivars per dollar on the black market since Feb. 8, when the currency was devalued 32 percent on the Cadivi system.

“The only reason not to disclose the FX rate is because they don’t want to concede a de facto second devaluation in the middle of an election campaign,” Benjamin Ramsey, an analyst at JPMorgan Chase & Co. in New York, said in an e-mailed statement. “I think it’s safe to assume it was above the official 6.3, otherwise they would have disclosed.”

http://www.bloomberg.com/news/2013-03-27/venezuela-sells-200-mln-in-auction-without-revealing-fx-rate.html