VÍCTOR SALMERÓN
EL UNIVERSAL

In April 1996, the government of President Rafael Caldera terminated an exchange control implemented in July 1994. Then, the official exchange rate for the US dollar accounted for VEB 290. In the parallel market, that emerged by means of Brady bonds and became the benchmark for most commodities, the US dollar was traded at VEB 465 -a big difference of 60 percent.

Is it the same old story? Now, there is a parallel market where the foreign currency can be gotten legally in the unregulated trading without the need to resort to Cadivi, the Venezuelan government foreign exchange control board. This parallel market is based on trading of the stocks of telecommunications company Cantv at NYSE. There, the exchange rate stood at VEB 4,391 last February 1st -a 104-percent difference as compared with the official rate of VEB 2,150 per USD.
 
Like the previous exchange control, the "swap dollar," that is, unregulated trading of Cantv stocks, started to take precedence over the economy. Sure enough, the 2-percent inflation of January was mostly related to the fact that a significant number of companies view this exchange rate as the actual one when estimating replacement costs.

According to analysts, the parallel dollar is getting a higher profile because Cadivi is requiring a non-production certificate from companies that import a large list of input, resulting into the uncertain possibility to get US dollars at VEB 2,150.

In addition, those who have excess of money do not have another choice. Interest rates offered by banks to account holders total 10 percent, as compared with 17-percent inflation. Therefore, there is no incentive to place the money in the financial market and the demand for the US dollar in the parallel market grows.

Last year, the Caracas stock exchange became an investment means and accounted for high return. However, when President Hugo Chávez announced the nationalization of some companies, the end of the autonomy of the Central Bank of Venezuela and a constitutional reform towards a novel concept of socialism, the stock-exchange index plummeted by 30 percent.

Translated by Conchita Delgado
cdelgado@eluniversal.com