Venezuela’s currency just had the biggest monthly collapse ever
Venezuela’s currency - the so-called “strong bolivar” - is weakening beyond levels that analysts had forecast just a few weeks ago as an expanding money supply chases a limited amount of U.S. dollars.
The currency has lost 45 percent of its value so far this month to trade at 2,753 bolivars per U.S. dollar on Thursday, according to dolartoday.com, a widely-watched website that tracks the black market exchange rate in Caracas. That’s the biggest monthly decline ever, according to data compiled by Bloomberg.
“The government has started injecting bolivars into the financial system in an accelerated manner again, and it’s set off repressed demand,” Asdrubal Oliveros, director of Caracas-based economic consultancy Ecoanalitica, said in a telephone interview. “There are too many bolivars in the street. People have the option of either buying goods or dollars, and they’re buying dollars.”
Inflation will likely start to accelerate over the coming months in certain sectors that are sensitive to the black market rate including alcoholic beverages, restaurants, electronics, and appliances, Oliveros said.