Looking at the volumes at the “new”, “new” Venezuelan Central Bank exchange market

June 29, 2010

Well, we were told that the now banned swap market was mostly speculation and the President of the Central Bank said US$ 26 million a day should be sufficient. Well, the graph below shows volume so far:

Thus, with corporations limited to US$ 50,000 a day, individuals with US$ 5,000 a year, banks still putting the system together, volume is already up to US$ 44 million.

Not pretty.

38 Responses to “Looking at the volumes at the “new”, “new” Venezuelan Central Bank exchange market”

  1. moctavio Says:

    Banks are being very cagey, they are asking for things that the BCV is not requiring and covering their butts at maximum, it seems the best thing is to use Government banks.

  2. sapitosetty Says:

    The volumes, which fell by half this week, seem to bear out this last comment. Miguel, if you’re hearing anything, it would be interesting to read it.

  3. ECG Says:

    Well I wonder if the scheme is already on the verge of collapsing. Today some banks refused to intermediate unless you previously worked CADIVI with them (and had a current RUSUAD #). They argued these were new regulations imposed from the central bank. If true, it looks like they want people to scramble for a bit to dampen demand and buy some time.

  4. Kevin Says:

    If you want to sell your apartment and can’t get your money out — Hugo won.

    To you that may be a collapse — to Hugo — It is the sweet smell of victory.

  5. Kevin Says:

    ECG — You guys are going to have define what you mean by collapse. If people want to buy $200 million and can get only $40 million per day — does that mean it has collapsed? Not really. They can repeat the same procedure the next day.

    The black market rate may go to 12Bs/$, then to 20Bs, then to 50Bs (according to the web, it may be approaching 12Bs now). Many businesses may collapse. Manufacturing may collapse. Eventually the whole economy may collapse over time. But the “new” exchange rate system won’t necessarily collapse.

    But I have a different question. The new system is supposed to replace the old semi-legal “parallel rate.” There, the market set the exchange rate, but access was unlimited. But there was rationed access to many buyers at more favorable exchange rates via CADIVI. Are the people who are getting authorization to buy in the new system the same ones who used to buy $ at the old parallel rate OR are some purchasers being moved from the old CADIVI system to the more depreciated rates under the new system?

    In the later case, the new system is even more restrictive. If the BCV says they are supplying $40 million per day to the “new” exchange market, it would be less than the number first appears to be. The new market would need to take the place of not only the old parallel rate, but carry some of the old CADIVI rate.

    In either case, you won’t necessarily see a well-defined collapse. You will see shortages.

  6. ECG Says:

    From observation:

    I think banks are almost up to speed at this point.

    Companies have some way to go. Small importers have it a little easier and I think they are 80% there. For larger importers is more difficult but I know of a few that have been successful at purchasing the bonds (not so at selling them and getting the $, but this has to do with not having the brokerage accounts ready). So I think the larger companies are getting there.

    I think demand should increase significantly during the month of July.

  7. ECG Says:

    I’m with you. It will collapse.

    I guess I’m trying to see if there is a way to model this. I don’t understand enough about what is going on (particularly on the supply side) to even start.

  8. ECG Says:

    Maybe. It could very well be collapsing already but it’s hard to tell.

    I think a lot of the issues that we’ve been hearing about have to do with operational “start up” problems: each bank interpreting the regulations differently, many companies having to change their “estatutos”, initial documentation having to be signed by all directors (and often times not all of them readily available), and so on. Other problems may have to do with companies not having their brokerage accounts open or active with the banks.

    Now, no question this scheme will collapse. But, it is possible to calculate (theoretically) when? When will there not be enough bonds “available” for this system to function? Is this the right way to look at this? Can it be calculated?


  9. ECG Says:


    I have a question. When does the current mechanism for the purchase of $ become unviable? When does it fall apart? How much more does the demand have to grow before it can not be satisfied?

    Thank you.


  10. Gringo Says:

    I blame Spain’s inability to hold together an elected slightly liberal democratic government in the 30s.And when Franco decided to purge the rojo those who got out, and had to get out, headed for their preferred countries – namely Cuba and Venezuela. It was only a matter of time I suppose.

    Alek Boyd, whose maternal grandparents fled Franco, has been anything but rojo/rojito in his response to Chávez.

    Try a new theory.

  11. Kevin Says:

    Island Canuck

    Believe me, I wasn’t being critical even if I was slightly irreverent. I’m impressed by what you’ve shown. I was just pointing out that, properly interpreted, your data indicates that things are even worse. Inflation is over 80% now.

    And you are VERY right that when the shortages hit it will get a lot worse. The black market prices are always much higher. Whatever the official statistics say, inflation could hit an annualized rate of 100% if the current rate is actually near 80%.

  12. Kepler Says:

    History is not completely cyclical, but there are a few lessons that can be learnt sometimes…history also helps to understand our enemy.

    My take is that the vast majority of Venezuelans can get used to a lot of things as long as they can dance raspadito and sobadito and sabrosito and have some drink. That goes for a lot of people in every socioeconomic group. It will get worse and worse. The hell’s the limit…or a civil war…unless our opposition starts to get into some heavy, difficult job to win over minds and demining the field.

    What is happening in Venezuela is more like the Llaneros are taking over, the same Llaneros Alexander von Humboldt saw as a possible cause for chaos in Venezuela, the lawless, the ones full of resentment.
    They can manipulate – still – a large part of the ignorant masses or else make those who reject them fear.

    Not for nothing from Diosdado to Chávez most of those Chavistas are llaneros or have very close llanero roots. Chávez’s great-grandfather was the typical mini-caudillo murderer. They are using the usual Bolivar cult plus some very badly digested communist ideas. From communism they mostly take images and methods for control, not much more, like real education, which communists did work on in the Soviet Union.

    They will use more and more such structures as the councils to circumvent the opposition. People will have to vote openly or the like – they will give some excuses about this, saying people just have to raise hands to vote for some representative who will for some time take their interest to higher echelons in the “Popular power”.

    Our opposition leaders are mostly UCAB alumni or the like, born in Eastern Caracas, people who seem to forget most Venezuelans have never left the country. That is not a crime and should not be a hindrance but
    somehow they do fail to connect, they fail, for instance, to talk about issues affecting most people but not them. If they did, they would gain more credibility. They don’t get out of their little fiefdoms…initially because they do not feel like but more and more now because it is getting harder and more dangerous. They fail to see the vast majority of Venezuelans do not live in Caracas-Maracaibo-Valencia. Actually, the majority lives just 10 to 150 kilometres from there plus a couple of key areas like Maturín or Araure-Acarigua.

    In spite of all the difference between very mobile Saudi Venezuela and Russia of the early XX century or Cuba of the fifties, the opposition leadership is to a big part still linked to rather “conservative” group or very old dinosaurs who never learnt to articulate ideas or present some sort of vision for all. Even if most of the big millionaires are now big Chavistas honchos, they came from down and they at least speak some pseudo-talk, they tell some rubbish hardly historical stories about the people’s “history”, about “our Indian and African roots”. Never mind Venezuelans have more European roots than anything else, never mind most Venezuelans themselves descend not just from the raped but the raper. Stilll, most people in our country have this image that “somos una nación joven, nos jodieron los otros, nos han jodido todos”. They also have this image of “Venezuela is a rich land, we just need to distribute”. No one, no one has had the balls to tell them Venezuela is in reality poor and it will always be, no matter how much oil, unless the average person is an educated and productive citizen.

    Chavismo will try to make most thinking Venezuelans leave the country, like they did in Cuba and some years ago in Belarus.

    This is what we are confronting. It can get much worse unless we start to understand what real union is (including merging parties), unless we challenge and challenge the government to talk what it thinks on pluralism, unless we call Chavista honchos cowards for not debating, unless we present ideas that people from Vargas and Calabozo, from Maturín and El Tocuyo like and chavismo can only refuse.

  13. Gordo Says:

    You guys like to talk history….

    If history is so informative, tell me please, if things are so god-awful now, and things getting worse…

    and eventually people are going to reach some kind of “tipping-point…”

    then why am I hearing this flood of terrible news and no tipping point has been reached yet?

    In fact, there are lots of signs that the majority are falling for Chavez’s rhetoric and are blaming the opposition!

  14. Kepler Says:

    Pedro, give me a break. Do you think Spaniards in Venezuela are particularly “red”?
    Unfortunately for Spain, it has got stuck in a mostly biparty system, PSOE versus PP, where
    additional parties with some power are mostly fighting for their regions
    and not presenting an alternative vision as in Germany or in the Netherlands or Switzerland or Sweden or even – finally – Britain now to some extent. So it has been either PSOE for way too long or a group of conservatives and rather fascist blokes.

    Venezuela’s turn to the extreme left (or rather to the Bolivarian-caudillo-lefties) was not precisely a product of Spanish expats.

  15. Pedrop Says:

    I blame Spain’s inability to hold together an elected slightly liberal democratic government in the 30s.

    And when Franco decided to purge the rojo those who got out, and had to get out, headed for their preferred countries – namely Cuba and Venezuela.

    It was only a matter of time I suppose.

  16. Kepler Says:

    What’s BBVA? The bank?
    I think at the beginning there was a lot of stuff like this:


    My very strong bet is that the 1989 riots were to a big extent promoted by some very hard core commies with some curious mixture of this stupid “Bolivarianismo” cult (as Bolívar is the most anal but sure cult to get ignorant Venezuelans under controlled).

    Communism was crumbling down in Europe but several members of the Partido Comunista de Venezuela and other Venezuelans were actually trained by the KGB still in the eighties. They were specially trained for CONSPIRACY work (rioting included).

    One example was profesor Lenin Moreno, nephew of Farías, a former president of the PCV who died some years ago and who was honoured at the Asamblea Nacional in 2007. I wrote something about that.

    I got the information from Bukovsky’s site with old Soviet documents.
    I am sure dozens of those who went to Russia got that kind of training in the decades prior to the end of the Soviet Union.
    Now Cuba will certainly be giving training that is more about keeping up the system.

  17. Mick Says:

    island canuck — your posting of actual current data gives those of us who only have academic knowledge and propaganda, something to work with. Thank you!!

  18. island canuck Says:

    Sorry Kevin, I’m not a mathematician or economist. All I did was double the 6 month rate. Disculpa.

    I personally believe that when the inevitable effects of the non existing exchange market hit within the next months that inflation will indeed be over 80%. That won’t be the official number however the reality will be near that number.

  19. Kevin Says:

    island canuck — a technical correction

    You are a cock-eyed optimist.

    If “the increase in the 1st 6 months is 35.6% or over 70% on an annualized basis.”

    Then the annualized basis is 1.356 x 1.356 = 1.839. So the annualized inflation rate is 83.9%.

  20. moctavio Says:

    Here is my take on “Who is behind Chavez?”

    In the beginning it was a collection of dreamers, Miquilena coordinated them. He got funding from BBVA, to the Cubans, to the FARC, to scared Venezuelans, to his buddies. Yes, there was a lot of international funding around it. Ever wonder why there are so many “revolutions’ in oil countries?

    And then he won. That alone gave him power. He controlled the oil money. He tried to listen to his well intentioned advisers. But Fidel was pressuring him, telling him he had the money to become the continental leader he never was able to become. But his close advisers were telling him otherwise. He wanted more out of the Ministry of Finance, he wasn’t getting, out with him. He wanted more out of PDVSA, they would not budge. Out with 20,000 of them

    Now he was in the drivers seat, he could help anyone with lots, lots of money and they all sucked up to him, from Evo, to Lula to Nestor. Oil went up, life was good. Venezuelans were not too happy. Fidel told him what to do. It worked!

    But throwing money around was not enough, let’s nationalize A through Z, import everything. People are unhappy. There are shortages. Lost the referendum. How could they dare, I don’t care, I will pass laws. Lula warns me to not do it, fuck him. Let me try to rescue hostages in Colombians. Alvaro screwed. Oh shit, what do I do now.

    Nationalize, go to Iran, act weird. Santos will never be…oh shit, the world is changing and Fidel is dying.

    Press on, onward the crooked and incompetent revolution, something will happen and I will be reelected in 2012.

  21. HalfEmpty Says:

    No link required.
    Bonfideeeeez you already got.

  22. island canuck Says:

    If anyone is interested I updated my list of 65 daily items & services which I have been tracking since Jan. 1 here in Isla Margarita & the increase in the 1st 6 months is 35.6% or over 70% on an annualized basis.

    I’d love to provide a link but I’m nervous of the repercussions it might bring if I outed myself. 🙂

    This list includes alcohol, grocery items, basic car insurance, DirecTV, personal use items like shaving cream, fruit & vegetables and many others.

    Our prices here may not be reflected in other parts of the country however we are not subject to IVA here so maybe my numbers are lower than other areas.

  23. Kevin Says:

    Hitler??? He’s closer to Porky Pig or some other cartoon character! Especially his economics!

  24. loroferoz Says:

    Oh, of course, they are also clear that they have to have an enemy.

    But that is not SO (or so NOT) ideological, however much they identify the U.S.A. with the always hated liberal ideas, however much they denounce the U.S.A. precisely for those policies of the federal government (foreign intervention covert and overt, immigration, and others) that are certainly NOT liberal.

    The enemy is there for the sake of suspension of disbelief in people who would begin demanding solutions Chavez is not able to produce, or would ask themselves why Chavez’s policies are so at odds with elementary common sense. Then, it’s there to push blame for failure away from themselves and onto the enemy. And lastly, to identify and taint (by repetitious mantras) any and all opposition to their grand plans as somewhat aligned with the enemy, and thus treasonous.

  25. firepigette Says:

    I would like to remind all of Chavez’s core message…this is a quote I copied from I do not remember where- quite good to ponder.Helps to remember what his motives are and predict where it is all leading:

    “The United States is a criminal, terrorist, imperialist global oppressor.

    • Capitalism and free trade are responsible for the abject poverty in which billions of humans live.

    • The FTAA is a U.S. conspiracy to enslave Latin America.

    • The third world is poor because the U.S. stole the third world’s natural resources and has created institutions like the International Monetary Fund that exist only to keep the poor in abeyance.

    • Socialism is good, almost God-like.

    • It’s all right if you hate Americans in particular and the rich in general.”

  26. loroferoz Says:

    “There is so much more that I missed…. how much worse can it get? Does it even matter if it gets any worse?”

    Yes, it WILL get to the point where Venezuela sees the face of national failure, and where it becomes a place anybody sane would want to escape from. I only wonder HOW close it will get to the point where Venezuela is written off as a basket case.

    Chavez is just an ignorant military officer who is only clear (together with his pals) that he hates liberal ideas and who does think that society can be directed towards greatness by him, because they have this huge military officers’ egos which go together with an obtuse attitude and no honesty at all. The only practical result of this is corruption and authoritarianism (by Chavez and said pals) , ah, and chaos, given that the Venezuelan military was no good for anything to begin with.

    If it hadn’t been for oil, the economic malady and the lack of control of the economy by the government would have sufficed to boot these sorry freaks. Like it did in most of Latin America after, say three years. But there is oil, and we have to wait until he finishes ruining oil production too. Then, the situation will get hellish, way worse than Chile or Argentina when the dictatorships started, because Venezuela produces squat besides oil.

    When it gets hellish by the standards of the poor (which have been living by standards which are hellish to a First World citizen even in the best of times), the problem will probably take care of itself. It will not be pretty, though. And I hope it will be a real wallop, a lesson to Venezuelans, poor and rich.

    How is all that linked to the new currency market? Well, it will collapse because it’s not realistic, and because it’s managed by Chavez’s pals. This will produce scarcity and new corruption.

  27. A_Antonio Says:

    Chavez is not Hitler, but is Hitler, Mussolini, Adi Amin, Sadam Husein, Nero and Caligula all they mix, together and worst.

  28. Roberto N Says:

    What are the odds the $500 from the “lost” paperwork ends up on the black market?

  29. Robert Says:

    Minor story but my cunado is coming to Texas for a visit. He was approved for his cadivi dollars at his bank in Punto Fijo, the bank lost the paperwork, he refiled and was approved again, went for the dollars and the bank did not have any. Told him he could find them at a bank in Caracas. He doesn’t live in Caracas.

    And we are only talking a puny 500 bucks.

  30. moses Says:

    One of the car assembly plants, Toyota, has had to cut production due to problems with its suppliers to locate $ outside cadivi. Were are talking of 40 % to 60 %.

    They are located in Cumana, were they are the main private employer.

  31. firepigette Says:

    Chavez might not be Hitler but that doesn’t keep him from having similarities.

  32. m_astera Says:

    Chavez ain’t Hitler.

  33. Mick Says:

    This is exactly how Hitler started in the 30’s, taking from the rich Jews and giving to the underprivileged loyal followers. He too liked to rant about how HE knew what was best for the people.

  34. Gonzalo Says:

    It will even get worse and it can get worse than that!!!!

  35. Gordo Says:

    Ok. The emperors have no clothes!

    Now what? If there aren’t sufficient dollars to support demand, what are the likely consequences?

    Let’s see… I’ve hear: 1. more job losses, 2. more shortages, 3. more business closing up, 4. more inflation, 5. more people (in spite of their political affiliations) finding it hard to make ends meet, 6. more blaming the bourgeoisie and its news media propaganda machine and its free enterprise capitalist exploiters.

    Meanwhile, 1. members of the opposition who complain are arrested, news media are shut down, 2. Chavistas are given guns, 3. the army is given a raise, 4. new weapon systems are purchased, 5. farms, buildings, banks, etc. are seized, 6. opposition leaders are removed from posts and elections, 7. relationships with Cuba, Iran, Syria, etc. are elevated into “partnerships,” drugs traffic through Venezuela draws international attention, terrorist training sites continue their sprawl…
    debts to contractors are dealt with my “nationalizing” their assets….

    There is so much more that I missed…. how much worse can it get? Does it even matter if it gets any worse?

  36. Gonzalo Says:

    Have not heard one Company or individual being able to buy dollars with the new goverment scheme. But heard from Herbarlife that is trying to repatriate 40000000$ dollars and Mattel 7000000$ with no sucess…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: