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COUNTRY INSIGHTS

Devaluation, Step by Step
VENEZUELA · Report · 17 Apr 2014

Executive Summary Fourteen months of slow reforms have shaped the forex regime that will, in our view, be in place until after the 2015 legislative elections. The system is based on three official exchange rates: the 6.30 bolivars per dollar Cadivi/Cencoex rate, Sicad and Sicad II. The government...

Buying Time
VENEZUELA · Report · 26 Mar 2014

Executive Summary Two months of protests have left dozens dead, hundreds injured, over 1,800 arrested, assets damaged, and daily life disrupted. Government repression has been severe. Constitutional violations have set dangerous precedents. This turmoil has hurt the government’s image abroad but ...

CORRECTED - Sicad II started at last. No surprises.
VENEZUELA · In Brief · 24 Mar 2014

In line with Rafael Ramírez’s unofficial announcements, the average price of the dollar in Sicad II in its first day of operations was 51.86 Bs/$, as BCV reported at 6:00 PM. No information was given on trading volume. However, we believe volume today was low. Participants and banks have had litt...

Sicad II: Relief, No Solution
VENEZUELA · Report · 18 Mar 2014

Sicad II will begin operating soon under Foreign Exchange Agreement (CC) 27[1]. Individuals and companies will be able to buy and sell foreign currency and dollar-denominated securities at a price that will reflect market conditions and, more importantly, intervention by BCV and Pdvsa. Sicad II w...

Stagflation But No Blow-out
VENEZUELA · Forecast · 13 Mar 2014

Executive Summary Our 2014–2015 central scenarios assume that stagflation leads to social conflict. We expect episodes of turbulence but no widespread blow-out. Inflation accelerates, economic activity weakens, real consumption falls, and oil production is stagnant or slightly down. GDP falls by ...

Political Earthquake
VENEZUELA · Report · 21 Feb 2014

The Venezuelan political puzzle, shaken by widespread protests since early February, is slowly starting to come together again even though some parts don’t fit together yet. Leopoldo López’s image as opposition leader has strengthened. He turned himself in on February 18, as promised, in a massiv...

Weak Foreign Public Sector Assets
VENEZUELA · Report · 20 Feb 2014

We update our estimate of public sector foreign financial assets including official data on the central bank’s foreign reserves and partial information on non-reserve assets. We estimate that unencumbered liquid foreign assets fell to $30.3 billion by December 2013 from $46.8 billion in December ...

Political Violence: Episode or New Phase?
VENEZUELA · Report · 14 Feb 2014

The opposition’s defeat in the December 2013 municipal elections fueled the debate on the path to power in Venezuela among opposition leaders. Some argue that Venezuela can’t endure five more years with a Maduro government while others believe that the next few years should be devoted to building...

Stubborn Inflation
VENEZUELA · Report · 13 Feb 2014

Monthly National Consumer Price Index (NCPI) inflation accelerated in January 2014 to 3.3 percent from 2.2 percent in December 2013. The year-on-year rate closed at 56.2 percent (56.1 percent last year). Inflation usually slows in January reflecting seasonal decline in demand and retail sales. Th...

Fair Prices or General Price Control?
VENEZUELA · Report · 07 Feb 2014

The recently approved Law on Fair Prices (LOPJ) fully subjects economic activity to state control. The law created a government agency with broad powers to regulate prices, costs and profit margins of all companies and individuals producing goods and services in Venezuela. Penalties and sanctions...

Unfortunate Glitch
VENEZUELA · In Brief · 05 Feb 2014 · 3 responses

The central bank’s decision to suspend Sicad No.16 led to confusion and hurt the credibility of the new forex policy announced by Rafael Ramírez, Vicepresident for Economic Affairs, on 22 January 2014. It's the first time a Sicad event has been suspended. It was the first auction after Ramírez an...

Waiting For The Second Shoe
VENEZUELA · Report · 26 Jan 2014

Measures announced so far, in our view, set the stage for a more meaningful bolivar devaluation shortly. This is just the beginning. So far the government has sharpened the tools for forex and price controls, raised the cost and reduced the amount of dollars for personal expenses abroad, and clos...

Radical Ideology, Pragmatic Implementation
VENEZUELA · Report · 17 Jan 2014

In his first annual message to the National Assembly on 15 January 2014, President Nicolas Maduro confirmed the government’s intervention strategy "no matter what happens” (sic) emphasizing on controls on prices and foreign exchange transactions. Shortly after, Jorge Arreaza, Executive Vicepresid...

Maduro's address will be at at 4:00PM (Caracas time)
VENEZUELA · In Brief · 15 Jan 2014

As per the National Assembly Secretariat's announcement.

Heads Up
VENEZUELA · In Brief · 14 Jan 2014

Tomorrow, 15 January 2014, President Nicolás Maduro will present the Annual Presidential Message to the the National Assembly. He has offered to take this opportunity to make "special" announcements. Maduro might announce some of the measures that markets expect, particularly on foreign exchange ...

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