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WHY NOT LOWER THE EXCHANGE?

The answer to this question has two components: the first is the amount of dollars available in the market to buy and the latter are the expectations of investors about the country's political conflict.

tenders offered by the Central Bank in the last two weeks have not been sufficient to meet the demand for foreign investors and to consider that the country's revenues fell sharply in 2009 and that CADIVI forced to reduce by 40% the supply of foreign exchange. While it is true that oil prices have risen compared to last year, the national executive has a number of commitments and expenses so high that the reality is that even at 4.30 there is money to meet importers.

is why if you need to bring materials or repatriate profits, should I go to so-called parallel market and buy at the price stated herein. Analysts serious demand for dollars in the market in 2009 was 80 MM dollars a week, if the State has so far released only 180 million in two weeks, and there is a lag in the currencies of at least 3 months, I got you. account and you will see that unless there is a considerable increase in the supply of securities in this market the dollar exchange, there is no incentive to lower price.

is obvious that the government may surprise the market, increasing the amount of auctions and changing the instrument to be auctioned to provide greater flexibility and liquidity to the market, but here's when the other component has its effect.

The extent of devaluation can be healthy, poor necessary as a diet or comply with a tortuous treatment, but requires the creation of a climate of confidence and helps the business to its positive effects are seen. This is where the State has failed, threats, conflicts, expropriation, closures, punishments ultimately, coercion, creates distrust among investors and this feeds the appetite for hard currency by safeguard the hard-earned Bs.

This uncertainty acts as a balloon that is placed under water, while you have a subject, not out but if you're not careful, he flees to the surface, the state can flood the market with dollars but if the conflict continues and increasing distrust the slightest wink, the exchange rate as the balloon rises.

Until next entry.

PS: I'm not foreshadowing that the dollar will reach 8 Bolívares simply that the uptrend is likely to continue state efforts may be null if there is no trust to stabilize the perception of investors.

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