February 14, 2013

What was now devalued in Venezuela was the official exchange rate of the bolivar, not the much less valued real rate

Sir, I need to point out a certain lack of preciseness in my friend Moises Naim’s “Venezuela’s devaluation is another desperate Chavez move” February 14. What was now devalued was the Venezuelan official exchange rate, since Venezuela’s “real” exchange rate, the result of dividing all the bolivares paid for all dollars purchased, has been suffering much larger devaluations for a long time. Just the fact that in Venezuela it is prohibited to make reference to a FX rate other than the official, does not mean it does not exist. Here you find for instance a link to the Green Lettuce.

In fact devaluing the cheap official rate for accessing dollars can in some circumstances could even help to revalue the “real” rate, at least initially, for a short while.

And in reference to domestic gas prices I also I believe it is important to point out that the current government, which calls itself socialists, has used up more value giving out gas basically for free, than the value in all their other social programs put to together, and, be amazed, this fact was not even an issue in the recent elections… the opposition has kept mum about it too, for about a decade.