JP Morgan does not rule out an adjustment in the forex rate of the National Center for Foreign Trade from VEB 6.30 to VEB 8.40 per US dollar
MAYELA ARMAS H. | EL UNIVERSAL
Thursday March 20, 2014 10:02 AM
The Venezuelan Government started the New Year with a deficit in its fiscal accounts, which has led to a revision to the foreign exchange policy, including the incorporation of the Second Ancillary Foreign Currency System (Sicad 2), whose forex rate is set to fluctuate. Nonetheless, the effects of the new architecture would not satisfy demand if authorities fail to cut down on public spending.
Although authorities have not explained how much foreign currency supply would rise with the new supplementary mechanism, income would not be enough to meet the needs of public institutions.
The director of research economic firm Ecoanalítica, Asdrúbal Oliveros, has outlined that "although income deriving from Sicad 2 operations could be useful, a policy aimed at reducing public expenditure and a reform of the country monetary policy are needed."
In his view, Oliveros asserts that the impact of devaluation on the supplementary forex system is subject to other actions. Unless measures are adopted, the system would fail.
Meanwhile, JP Morgan deems Sicad 2 could gradually flow. The firm estimates oil giant Pdvsa would allocate USD 5-10 billion out of its oil revenues. Moreover, JP Morgan projects bonds stock held by public institutions would account for USD 5.8 billion.
In a report the firm also expresses the need for further policies. In this context, it does not rule out an adjustment in the forex rate of the National Center for Foreign Trade, from VEB 6.30 to VEB 8.40 per US dollar.
Although authorities have not explained how much foreign currency supply would rise with the new supplementary mechanism, income would not be enough to meet the needs of public institutions.
The director of research economic firm Ecoanalítica, Asdrúbal Oliveros, has outlined that "although income deriving from Sicad 2 operations could be useful, a policy aimed at reducing public expenditure and a reform of the country monetary policy are needed."
In his view, Oliveros asserts that the impact of devaluation on the supplementary forex system is subject to other actions. Unless measures are adopted, the system would fail.
Meanwhile, JP Morgan deems Sicad 2 could gradually flow. The firm estimates oil giant Pdvsa would allocate USD 5-10 billion out of its oil revenues. Moreover, JP Morgan projects bonds stock held by public institutions would account for USD 5.8 billion.
In a report the firm also expresses the need for further policies. In this context, it does not rule out an adjustment in the forex rate of the National Center for Foreign Trade, from VEB 6.30 to VEB 8.40 per US dollar.
