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.

Can accounting really be allowed to base itself on known fictions?

Sir it is with amazement I read Barney Jopson, Benedict Mander and Miles Johnson reporting on how “Venezuela devaluation dents big companies”, February 12.

I understand the locals are prohibited from even thinking in terms of a different foreign exchange rate than what the current oilygarchs in power allows them to, though even so, most of them do, at least in the shadows.

But that grown-up foreign companies hang on to a rate that drives only a part of the economy, and have not created reserves to cover for this and other adjustments of the fx fiction to come, is astonishing. It sort of falls in the same category of naiveté as bank regulators believing that an AAA to AA rating has so little implicit risk so that they can allow banks to leverage over 60 times to 1 on such exposures.

Honestly, something is terribly wrong if auditors can ok balance sheets based on a known Bs. fiction.

How long do you intend to play this charade?

Sir day after day, week after week, month after month, year after year the Financial Times indicates the currency rate of Venezuela 2.1473 Bolívar Fuerte per Dollar and provides the additional vital footnote of “New Venezuelan Bolívar Fuerte introduced on Jan 1st 2008. Currency redenominated by 1000.”

Are you not aware that this currency rate in that it does not by far reflect the FX rate that applies to the whole Venezuelan economy is totally fictitious. That is has been fixed there since February 2003 and that those not favoured by having the government receive their Bolivar Fuerte in order to convert them into dollars, need currently to use at least 3 times as many Bolívar Fuerte to get a dollar.

For how long does FT play along in this charade of the Venezuelan government? If you want to put an end to it I suppose you have two alternatives the first to simultaneously publish an estimate of the rate in the unofficial market, which would provide your readers with more information, and the second not to publish any rate at all.