A perilous week
and a 20% devaluation

Monday 9, February 2004


Judging from the rising tensions over last week, and even this week end, it looks like the days ahead might be quite crucial. The Electoral Board should be giving Friday at the latest the results as to whether the Recall Election against Chavez goes. My guess is that they will find a way to postpone that announcement for at least a week or two, which is certainly going to exacerbate things more.

Meanwhile we start the week with the expected (Feb 5 post) Venezuelan Bolivar (Bs.) devaluation of its fixed rate. The street rate is way down already... As of today we go from 1,600 Bs to the USD to 1,920. The street rate jumped again to 3,200 late last week and perhaps it will go down some, but I think it did cross the 3,000 threshold for good. Still, in spite of the currency exchange control, the price control scheme, the control over the PDVSA income, and who knows how many other controls, the government admits its failure by accepting a 20% devaluation of the official rate, almost exactly a year to the day of the installation of the said controls. You can draw your own conclusions.

Through the week I will try to post more often and more briefly than usual, as events might force me to do so.