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Weekly Report - 08 February 2018 (WR-18-05)

VENEZUELA: Forced into devaluation

Venezuela’s central bank (BCV) has made subtle adjustments to its tightly controlled official exchange rate mechanisms which have resulted in a major devaluation of the Bolívar Fuerte (BF). This is ostensibly an attempt by the BCV to bring some stability to Venezuela’s malfunctioning economy and preserve its dwindling foreign reserves (which are estimated at just US$9.7bn). As the government led by President Nicolás Maduro shows no sign of moving away from its unorthodox economic policies, however, it will not be sufficient to escape the hyperinflationary cycle that the economy entered last year.

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