Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Venezuela's anti-inflation efforts dealt blow as currency tumbles

Economy Nov 23, 2022 07:51PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A street vendor holds a one dollar banknote beside an old Bolivar banknote in Caracas, Venezuela, October 1, 2021. REUTERS/Manaure Quintero/File Photo

CARACAS (Reuters) - Venezuela's effort to curb high inflation by stabilizing exchange rates is becoming less effective as the local bolivar currency slips in value against the dollar, analysts said on Wednesday.

For months, President Nicolas Maduro's administration has sought to fight inflation by anchoring the bolivar's exchange rate. It has increased the supply of foreign currency cash in local banks and limited the expansion of credit and public spending.

But that strategy is no longer working, analysts said.

In recent weeks, the Venezuelan Central Bank has sold fewer dollars and the government has increased spending, allowing the exchange rate to slide to 10.23 bolivars per dollar by Wednesday, according to the central bank's figures.

The local currency has depreciated 17% since October, and 55% so far this year. Last month, the country's monthly inflation was seen at 6.2%.

"The strategy of lowering prices with the exchange rate frozen is not working," said economist Jose Guerra, who predicted that inflation in November could possibly return to double digits.

At the end of 2021, inflation began to slow down but year-on-year inflation in Venezuela still stands at 155%, among the highest in the Latin American region, official data shows.

"The exchange environment lives with a fragile balance. Its stability depends on the amount of dollars that the Central Bank injects in an environment in which the government spends more in bolivars," said Luis Arturo Barcenas, economist at consultancy Ecoanalitica.

"The fragile model is imploding," he added.

The issuer's weekly placement of foreign currency in banks has been around $50 million, while a month ago it was $80 million to $100 million, according to estimates by local consultancy Sintesis Financiera.

Both economists said the government may be fine with letting the exchange rate slide a little more, if it allows them to spend again.

The central bank did not immediately respond to a request for comment.

Venezuela's anti-inflation efforts dealt blow as currency tumbles

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email