Venezuela: Parallel dollar continues to plummet in value in May
May 14, 2015
The bolivar traded in the parallel market hit a new record low on 13 May amid Venezuela’s deteriorating economic situation and increasing cash shortages in the country. The non-official exchange rate traded at 280.9 VEF per USD, which represented a 13.4% depreciation over the same day of the previous month. The parallel dollar has lost over half its value this year alone as recession, runaway inflation and the sharp fall in oil prices have combined to push Venezuela into its worst economic crisis since former President Hugo Chávez came into power.
Meanwhile, relatively little fluctuation has occurred in the Simadi exchange rate, the third tier of Venezuela’s overhauled exchange rate system. The new system, launched on 12 February, was designed to help ease dollar shortages and counteract widespread black market activity, however little has changed since its introduction. On 13 May, the exchange rate from the Simadi system traded at 199.5 VEF per USD, which represented just a 2.4% depreciation over the same day of the previous month. While the exchange rate from the Simadi system traded relatively close to the parallel dollar’s value at its introduction, a wide discrepancy has emerged between the two rates. As expected, the official exchange rate was unaltered at 6.3 VEF per USD on the same day. In addition, data from the Central Bank showed that an auction has yet to be held this year to buy dollars under the revamped Sicad system.