Venezuela to create new forex platform through legal reform

by Reuters
Wednesday, 12 February 2014 01:24 GMT

CARACAS, Feb 11 (Reuters) - Venezuelan President Nicolas Maduro on Tuesday said his government in the coming hours would reform currency exchange regulations to allow for a new foreign exchange platform under the OPEC nation's currency controls.

The long-awaited currency system, which economists see as a way to improve the corruption-ridden exchange control mechanism, would serve as a complement to the foreign exchange auction system known as Sicad, Maduro said.

"We are going to open a new system, Sicad 2, with the reform of the Exchange Crimes Law," Maduro said in a televised broadcast. "(The reform) is almost ready. In the coming hours, we should be putting it out. This will allow more supply of dollars from sources other than the state."

He did not offer details on how the law would change.

The 2010 Exchange Crimes Law gave the central bank exclusive rights over the purchase and sale of hard currency, preventing a legal market based foreign exchange system from existing.

Venezuela's vice president for the economy last week said authorities this month would create a "permuta" or "swap" system that allows for the purchase of hard currency through a platform that swaps local bonds for Venezuelan dollar-denominated bonds.

That news pushed the OPEC nation's global bonds up between 6 and 9 percent on Monday. Bondholders believe the creation of such a system would improve government finances and boost capacity to pay debts.

Venezuela currently maintains a two-tiered exchange system that provides dollars at 6.3 bolivars for priority goods such as food and medicine and another of around 11.3 for other types of imports.

But delays in the currency control system have left greenbacks fetching nearly 80 bolivars on the black market, opening ample opportunities for corruption by those who obtain dollars on the cheap and quickly flip them for a profit.

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