Venezuela to launch new exchange rate next week

A customer receives money at a currency exchange office in Caracas, Venezuela. (AFP file photo)
Updated 28 March 2017
0

Venezuela to launch new exchange rate next week

CARACAS: Venezuela next week will launch a new currency exchange mechanism to replace the DICOM rate, also known as SIMADI, President Nicolas Maduro said late on Monday in a televised speech as the Organization of the Petroleum Exporting Countries (OPEC) nation suffers a deep economic crisis.
The oil-rich country currently has two official exchange rates, DIPRO at 10 and SIMADI at 709 bolivars per dollar. On the black market, however, a dollar can fetch more than 3,000 bolivars because official mechanisms do not satiate demand.
“In a process of perfecting the system of collecting, administering and stabilizing the flow of hard currency in Venezuela, we have decided to activate from next week a new model of DICOM,” said Maduro, speaking at the close of an exhibit to showcase Venezuela’s economy called “Expo Venezuela Powerhouse.”
Maduro did not provide the new rate. Currency auctions will be held twice a week, he said.
Previous new exchange mechanisms have failed to curb the weakening of the bolivar on the black market, and economists widely say Maduro should be overhauling the creaking socialist model instead of tweaking it.
“So far, what Maduro has said about this ‘new forex scheme’ is more of the same,” said local economist Asdrubal Oliveros on Twitter.
“This new DICOM kicks off in a context where the shortfall of hard currency is between $10-$12 billion. There’s no capacity to increase the supply of dollars.”
Government critics say Venezuela’s complex set of currency controls are at the heart of its worsening economic mess. Millions of Venezuelans are not eating enough due to soaring inflation and shortages.
Maduro blames the problems on an “economic war” waged against his government by the opposition with the help of Washington.
Previous attempts to curb the spread between official and black market exchange rates have failed.
The various acronyms for new official rates — SITME, SICAD, SICAD II, SIMADI, DIPRO and DICOM — have become a joke among critics as the currency falls on the black market.
In the four years since Maduro came to power, Venezuela’s currency has fallen 99.3 percent against the dollar on the black market.
This means that the equivalent of $1,000 in bolivar savings then is now worth just $7.


China opens up finance sector to more foreign investment

Updated 20 July 2019
0

China opens up finance sector to more foreign investment

  • China will remove shareholding limits on foreign ownership of securities, insurance and fund management firms in 2020
  • Beijing has long promised to further open up its economy to foreign business participation and investment

BEIJING: China lifted some restrictions on foreign investment in the financial sector Saturday, as the world’s second largest economy fights slowing growth at home and a damaging trade war with the US.
China will remove shareholding limits on foreign ownership of securities, insurance and fund management firms in 2020, a year earlier than originally planned, the Financial Stability and Development Committee said in a statement posted by the central bank Saturday.
Foreign investors will also be encouraged to set up wealth management firms, currency brokerages and pension management companies, the statement said.
Beijing has long promised to further open up its economy to foreign business participation and investment but has generally dragged its feet in implementing the moves — a major point of contention with Washington and Brussels.
Saturday’s announcement followed a Friday meeting chaired by economic czar Liu He where policymakers focused on tackling financial risk and financial contagion and pledged new steps to support growth, according to a state council statement.
Additional measures include scrapping entry barriers for foreign insurance companies like a requirement of 30 years of business operations and canceling a 25 percent equity cap on foreign ownership of insurance asset management firms.
Foreign owned credit rating agencies will also be allowed to evaluate a greater number of bond and debt types, the statement said.
US President Donald Trump has launched a damaging tariff war in an attempt to force Beijing to further open up its economy and limit what he calls its unfair trade practices.
The US and China have hit each other with punitive tariffs covering more than $360 billion in two-way trade.
Trump and Xi Jinping agreed to revive fractious trade negotiations when they met on the sidelines of the G20 summit in Japan on June 29 and top US and Chinese negotiators have held phone talks this month.