Reply #32: Venezuela Bolivar Surges in Parallel Market on Plan Speculation [View All]

By Matthew Walter and Drew Benson

Aug. 20 (Bloomberg) -- Venezuela’s bolivar rose to a three- month high in unregulated trading on speculation the government will announce a plan to reduce the gap between the parallel and official exchange rates.

The currency gained 1.9 percent to 6.48 per dollar at 5:08 p.m. New York time, traders said. Finance Minister Ali Rodriguez said Aug. 17 he’s presented a plan to President Hugo Chavez to reduce the “imbalance” in the parallel rate, which trades 66 percent weaker than the government-set official rate of 2.15 per dollar.

“There’s a lot of expectation,” said Miguel Octavio, head of research at BBO Financial Services Inc. “Words can have a greater impact on the market than reality.”

The government may be considering the creation of a dual exchange rate or the implementation of regular government auctions of dollars for local investors to help meet demand for foreign currency, Octavio said. Venezuela is struggling to maintain its official rate after revenue from oil exports plunged earlier this year.

http://www.bloomberg.com/apps/news?pid=20601086&sid=aHUFjJO.suMA

And oil is back above $60. Woe is Venezuela. :)