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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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Menards Smallville Sale

Re-Devaluation, Devaluation

After decision to devalue the currency January 8, the government took on the task of trying to diminish the negative effect of devaluation, announcing price controls, minimum wage increase and the supply of bond auctions by the Central Bank to intervene in the so-called "market parallel "currency.

Moreover the president has redefined the economic term indicating that the measure was a revaluation of the bolivar, which simply seeks to try to minimize the drastic effect that involves the measurement itself.

Perhaps most interesting of all is the international perception that has been positive so far and even has given the nation an improvement in their rating risk, which has made the debt more attractive in international markets generating increases of more than 15 percent in the prices of some of the titles.

International investors see the positive side, less need to issue debt to fund domestic needs in Bs and an adjustment to the imbalance of the foreign exchange market. It seems that so far fulfilled its purpose.

To complement all the government announces auction of securities that are actually more deals as the price is fixed, ie there is the famous bid that is traditionally in this type event, which is logical as the government does not want the dollar alternative to fire and to the strong demand for the currency and the low supply, it is more likely that the price to skyrocket.

In any case, these auctions will provide some respite to the market, because although the dollars are not received immediately, there is the possibility of obtaining them. The problem here is that this scheme may not lower the price of the dollar, and nobody will leave their dollars today at a price less than 5.8 for having to wait three months to receive a 5.

This situation might improve, as the state use other titles such as PDVSA bought back bonds that are traded today much better than the past and could further stimulate the market downward.

So far so good, until we reach the barbarity of the expropriations. Was not it easier to give a little and meet with the commercial sector employers and reach an agreement? Furthermore I believe that the trade sector may have held a little higher prices because many of them already have their prices to the dollar to 10 BSF. I'm not saying they are saints, but closing stores and expropriate.

What money does the State expropriate? has not yet fulfilled the commitments of the previous expropriation and income have been reduced so?. Where is the generation of trust?. At this rate the possible positive effect the devaluation happens very fast and have the same risk, with a dollar more expensive price.

If the intention is to suppress the production system and the financial and corporate sectors of the country to do succumb, are on the right track, I just hope that the road does not end up scorched themselves.

Until next delivery!

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