Venezuela approves parallel currency exchange system

January 29, 2019 09:36
With prices doubling every few weeks, cash has become scarce in Venezuela and even the smallest transactions are carried out with debit cards. Photo: Reuters

Venezuelan authorities have given the go-ahead to a new, privately-run foreign exchange system that will operate in parallel to the official currency control system, Reuters reports.

The new currency platform, called Interbanex, began operations on Monday, selling dollars at 3,200 bolivars. That rate is 34.5 percent weaker than the official rate of 2,084 bolivares to the dollar.

Venezuela’s central bank said on Twitter that Interbanex “will become part of the country’s currency exchange market,” and that it was authorized by the Finance Ministry.

The announcement comes amid a political crisis in the country where an emboldened opposition, led by Juan Guaido, is challenging the rule of President Nicolas Maduro.

Maduro's ruling Socialist Party has over the years launched six “complementary” foreign exchange systems meant to improve access to dollars, but those systems all collapsed amid complaints by businesses that they could not obtain the greenbacks they needed.

The currency controls, originally created by late socialist leader Hugo Chavez in 2003, have sold dollars at an advantageous rate for basic goods while at times also selling hard currency for other items at a less favorable rate.

Critics call the currency controls one of the principal distortions of the crisis-stricken economy, which is expected to see inflation reach 10 million percent this year amid a broad collapse.

With prices doubling every few weeks, cash is scarce and even the smallest transactions are carried out with debit cards.

On its Twitter page, Interbanex says it is owned by “Spanish investors” and on its website it lists its owner as Interban Exchange.

Manuel Armas, a spokesman for Interbanex, was quoted as saying that Venezuela’s state institutions would not participate for now due to US sanctions on Maduro’s government.

Venezuelan opposition leader Guaido is seeking to pressure the government into holding new elections, a push that has won widespread support overseas.

Guaido has proclaimed himself president due to what he says was a fraudulent vote leading to Maduro’s re-election last year.

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