In early August I showed the graph above predicting the swap exchange rate or parallel rate would have to move up to catch up with the ¨ïmplicit¨rate. Well, it happened much faster than I thought even though increased reserves drove the implicit rate down a little bit.
Using Central Bank data, I did a study of what is the average seasonal increase in M2 from October to December and found 22% in the last 4 years. This means that the implicit rate will jump near Bs. 5600 per dollar in reserves. Add the Constitutional reform and the fears of what the Government intends to do with the ¨Bolivar Fuerte¨and Bs. 6,000 by the end of the year is quite likely.
The Devil's Excrement 
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