Last November I published a similar graph to the one below, comparing the “implicit” exchange rate, the ratio of monetary liquidity M2 to international reserves, to the parallel “swap” exchange rate and noted at the time that the Government was printing too much money as measured by the implicit rate and that meant the swap rate was going to move up.
Unfortunately, I was right and the swap rate has moved up sharply. As you can see from the graph below updated to the end of July, the Government managed to control liquidity in the first half issuing bolivar-dollar bonds, which kept the two rates close, but in the last few weeks has accelerated spending and thus the printing and the implicit rate has moved sharply up, way above the swap rate. Note that every time this happens, the swap rate moves up sfast to close the gap and right now the difference is almost Bs. 800. Since the Government has no plans to have the massive issuance of bonds of the first half, then you know the swap rate only has one way to go: UP!, much like the conclusion of that post. 
The Devil's Excrement 
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