Venezuela Devalues Bolivar More Than 80% in Currency Auction…

By Anthony B. Sanders

Venezuela must be taking the books/movies “The Hunger Games” literally.

(Bloomberg) — Venezuela’s bolivar plunged more than 80 percent as the central bank restarted currency auctions for the first time since August as part of its efforts to ease a severe shortage of dollars and clamp down on hyperinflation.

One dollar bought about 25,000 bolivars at the auction, compared with 3,345 bolivars at the last so-called Dicom sale about six months ago. The rate announced Monday is still much stronger than in the black market, where individuals and businesses without access to the official markets pay about 225,000 bolivars per dollar, according to dolartoday.com.

The devaluation — even if it falls short of the street rate — represents a last-ditch effort by President Nicolas Maduro to remedy the dire economic crisis plaguing this oil-rich nation amid a scarcity of foreign exchange. The weakened Dicom rate — now the only rate used for all official transactions — allows the government to further stretch the amount of dollars it doles out for imports and will make businesses’ purchases from overseas remarkably cheaper. It is also the rate used by foreign credit cards.

One dollar bought about 25,000 Bolivars at the auction?  Now one dollar equates to 28,964 Bolivars.

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Now there are reports of Venezuelan oil workers literally fainting on the job, curtailing oil production. Things were a lot brighter back in 2014 when Venezuelan oil fetched over $100. Now it fetches $56 when it can be pumped.

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Yes, Venezuela’s oil production is crashing.

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The Hunger Games, Maduro-style!

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Gary

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