The regime of Nicolás Maduro eliminates the restrictions imposed on banks on the purchase and sale of dollars

In the clearest signal that Venezuela By leaving behind its complex network of financial controls, local banks will once again be able to trade currencies. The measure may be too late, as the country is plagued by hyperinflation and a historic economic crisis.

Starting today, individuals and businesses will be able to buy or sell currencies in private and public banks and the average transaction will be published at the official rate by the Central Bank, according to a resolution released on Tuesday, May 2.

This measure is known after meetings held last week between the government and the banks, chaired by the president of the Central Bank, Calixto Ortega, the vice president of the Economic Zone, Tareck El Aissami, and the banking regulator Antonio Morales, according to direct knowledge of the conversations. The measure was unilateral by the government and did not require the lobbying of banks, they said.

Since former President Hugo Chávez instituted a foreign exchange control in 2003 after surviving a coup, the government largely controls the buying and selling of dollars in a system that sometimes created large subsidies to allow Venezuelans to travel abroad. they bought goods and also offered highly profitable arbitrage opportunities to government buddies and outsourced companies, thereby facilitating corruption.

In recent years, as the gap between the official rate and the black market has widened, some controls have begun to be eliminated. Today, in the streets of Caracas, there is essentially a single rate with many transactions in US dollars or using foreign credit cards.

"The measure is important and will serve as a respite for businesses, but not more than that," said Asdrúbal Oliveros, director of the consulting firm Ecobadítica in Caracas. The effects on the economy will be limited because larger problems limit the foreign exchange market.

With only $ 8.5 billion in foreign exchange reserves, much of it in gold bullion, the government will probably not be able to meet the dollar's demand, leaving the private sector and individuals the burden of filling a part of the gap. Many multinational corporations have been nationalized, ceased operations or have significantly reduced them. Even the largest oil industry is shaken by production, which has fallen to the lowest level in decades.

Although the measure could potentially simplify transactions and allow citizens to protect their savings from high inflation and a bolivar quickly devalued, it is announced amidst a dramatic political crisis during the course of President Nicolás Maduro and Juan Guaidó, the helmsman of the opposition National Assembly, claim to be the legitimate leader of the country.

The latest variant of a foreign currency auction system, called Dicom, has become irrelevant in recent months and it is not clear whether it will continue. Until now, in 2019, the Central Bank has only sold 40 million US dollars through Dicom, according to Henkel García, director of the Caracas econometrics consulting firm.

The recent sanction imposed on the monetary authority by the United States has accelerated the decision to open currency trading to commercial banks, with companies expressing their concern to participate in transactions on the Dicom platform, according to people close to the file.