Venezuela will allow securities denominated in hard currency to trade on a local bourse, the central bank said on Thursday, allowing citizens to legally acquire foreign exchange without going through the country's 15-year-old currency controls.
The crisis-stricken Opec nation is struggling under hyperinflation and product shortages that economists widely blame on currency controls that even ruling Socialist Party officials recognize have been plagued with corruption. Creating legal mechanisms to obtain dollars could make it easier for businesses to import raw materials or machine parts.
But it is unlikely to ease the economic crisis because the local bolivar currency has lost more than 99 percent of its value on the black market, leaving local firms largely unable to afford products acquired abroad. "This currency arrangement will reopen the market for securities for private citizens," Central Bank Director Pedro Maldonado said in a press conference. "Any private company that wants to issue debt in hard currency can sell it on the Bicentenary Exchange," he said, referring to a state-run bourse.
Between 2004 and 2010, local trading of dollar securities served as a parallel foreign exchange market known as "permuta" that provided hard currency to buyers who did not have permits to acquire it at a state-backed favourable rate.
The government of late President Hugo Chavez shut down the legal avenue for such trading in 2010, arguing that speculators were using it to damage the economy. Buying dollars on the black market continues to be seen as legally suspect despite being routine.
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