Venezuela’s bolivar currency fell below 1,000 to the dollar Wednesday, breaking the four-digit barrier for the first time amid a deepening economic crisis, according to a banned foreign exchange website.
The dollar was trading at 1,003.23 bolivars, according to US-based website dolartoday.com, which President Nicolas Maduro accuses of being part of an “economic war” by right-wing interests on the nation’s recession-hit economy.
That rate was orders of magnitude higher than the lowest official rate in the government’s complex, three-tiered foreign exchange controls: 6.3 bolivars to the dollar.
Venezuela uses exchange controls to ensure affordable prices for imports such as food and medicine. But there are reports of rampant corruption in the system, which effectively subsidizes importers with access to the lowest official rate.
With (Other OTC: WWTH – news) sliding crude prices eroding the oil giant’s export revenues, dollars have grown scarce — sending the price soaring at black-market exchanges and on sites such as dolartoday, which is banned by the government but can be accessed with a smartphone application.
“There’s an enormous distortion. It (Other OTC: ITGL – news) ‘s without parallel. There’s a miniscule group that has 160 times the buying power in currency and goods as the vast majority of the 30 million Venezuelans who suffer through shortages, long lines and inflation,” said economist Angel Garcia Banchs.
Under the official system, the second-tier exchange rate is 13.5 bolivars to the dollar, for raw materials and industrial supplies. The third is 200 to the dollar.
That rate, launched a year ago in a bid to reform the system, is meant to be decided by currency auctions. But the market has essentially broken down because of a lack of dollars.
Venezuela’s inflation rate is the highest in the world at 140 percent, as the exchange rate chaos wreaks havoc on supply and demand in the import-dependent country.
Dolartoday, which bases its rate on operations at forex houses in the Colombian border town of Cucuta, fought back against Maduro’s criticism.
“Saying dolartoday is responsible for the price of the dollar is like blaming the thermometer for your fever,” it wrote on Twitter (Xetra: A1W6XZ – news) .
