The dollar is the main threat to Chavez

How much the dollar traded in Venezuela? A good question to have more than one answer. It just depends on whether we are talking about the dollar's official, the one that can not be acquired or whether we are talking about the dollar side, that yes you can get but not at the price promised by the Central Bank of Venezuela in the official listing. You can not even buy at anything close to this value traded. In recent days, known as "dollar swap" in Venezuela (which represents the largest unofficial market benchmark that is generated in the sovereign bond swap bonds U.S. Treasury) was trading yesterday at 5, 30 bolivars at the top seller, after the end of last week will be about 6.0 bolivars per dollar, this is almost three times the official price is fixed at 2.15 bolivars per dollar. parallel dollar rate shot in Venezuela due to the increased devaluation expectations that exist in the country. Expectations of an eventual devaluation of the bolivar is high even though the government has said it will maintain parity in 2009, in force since 2005. In the darkness of the market, operators contacted by Reuters, said the matter: " The outlook for the country changed radically in less than a month.

The risks have increased as devaluation that oil has dropped?. This statement of the anonymous operator, honestly I was quite reasonable considering the situation being experienced by Venezuela. Is that an inability to move the international price of oil, something has to Chavez to avoid collapse their revenue from the sale of black gold. And a good alternative to increase their income, but not in dollars, but at least in bolivar fuerte (strong ¿?), Is through the devaluation of its currency.

But this potential devaluation could be high, in line with the needs of the Chavez government to keep their accounts under. So, if the Venezuelan account could close without any problems with an oil price 10% higher: Why not to devalue the Venezuelan currency by 10% and thus achieve higher income that would be needed? Obviously this is not an idea that I would recommend, but I imagine it can be an alternative that is evaluating Chavez. But OPEC already thought of a strategy that benefits Chavez, although not fully solve the problem that has been produced by the sharp drop in oil prices, which is simply the reduction of barrels of daily production. This agreement reached, Venezuela cut its daily production of 129,000 barrels of oil. While it is a decision that serves these countries, including Venezuela, to hold the price of a barrel of oil is certainly not a good decision at a time when the world economy is on the verge of a recession. This decision could aggravate the global crisis by generating any inflationary impulse. And this could have implications Venezuela negative in terms of imported inflation, which, perhaps the benefit of this measure is to be nil.

Returning to the subject of the dollar, its value remains very worried Venezuela Finance Minister. Ali Rodriguez Araque, admitted in a television interview that this represents a dilemma for the economic Cabinet, "Someone tell me, well, if you have an overvalued dollar, then it is easier to import than to produce, in part this is true, but it is also true that as we have a great dependence on imports, if we devalue sharply expensive imports?. But according to the value exhibited by the parallel dollar, it is clear that long ago, the dollar traded in Venezuela is a fictitious quote. What he is doing in other words the Venezuelan government is subsidizing the dollar to import products people need to be moved without a price. But this increases the distortions in an economy that increasingly thinks less to produce. And given the high level of inflation for the economy of Venezuela (which as of September, accumulating an increase of 21.8%, with a variation of 36% for the retail index and 53.3% for the food item) , the production costs of Venezuelan companies increased at a faster rate than do those of companies in the country's main trading partners (ie: USA, Brazil and Colombia).

This situation of the dollar in Venezuela in an entirely fictitious value, is destroying much of the productive sectors of the country, virtually transforming Venezuela into a producer of one good: oil. According to a note published in the Venezuelan newspaper "El Universal?" Central Bank statistics lay bare the effects of overvaluation (strong bolivar). When comparing the first half of 2005 with the same period in 2008, imports recorded an increase of 102% while non-oil exports, a barometer of how the ongoing attempt to reduce oil dependence, 13.2% fall?. The situation of the Venezuelan economy is certainly more complex. But it becomes increasingly essential to take immediate economic measures to combat the scourge of inflation and to adjust the value of the dollar, at least gradually. If Chavez does not react, then the currency of its "main enemy? eventually destroy his government. So the dollar has become a major threat from Chavez. We will meet again tomorrow, Horacio Pozzo