In an attempt to loosen its exchange controls, the central bank of Venezuela will allow banks within the country to open foreign currency trading platforms, according to a resolution published on Tuesday.
The move from the central bank is the latest attempt to help the struggling nation deal with hyperinflation and economic depression. Economists have identified that the country’s exchange control system could be stopping its potential recovery. However, it may be too little too late.
According to a report from Bloomberg, starting Tuesday, individuals and companies can buy or sell foreign currency from both private and state-run banks. The average of transactions will be published as the official rate by the central bank, the resolution stated.
Specifically, the resolution states that financial institutions will be permitted to carry out “purchase and sale of foreign currency by individuals and businesses.” As highlighted by Reuters, the central bank did not specify when foreign currency trading platforms would start operating.
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This is not the first time the country has tried to overhaul its complex financial controls. In fact, President Nicolas Maduro has promised to overhaul the system on multiple occasions, but the plans weren’t successful as the central bank didn’t supply enough currency to meet demand.
Speaking to Bloomberg, unnamed sources with alleged knowledge of the matter said that the announcement on Tuesday follows meetings between the government and banks. The talks were led by Central Bank President Calixto Ortega, Economy Vice President Tareck El Aissami and banking regulator Antonio Morales.
Sanctions and Economic Crisis Hurt FX Trading in Venezuela
Amidst its current economic crisis, foreign exchange (forex) trading in Venezuela is low. According to central bank data, the state-run FX system Dicom has sold just $32 million. This is because as oil price collapsed, Maduro’s government has provided less forex to be auctioned.
In the last week, the central bank has stopped offering the sale of foreign currency through Dicom following the United States imposing sanctions on the monetary authority as part of its attempts to pressure the president of the country to step down.