Venezuela devalues currency to align it with black market

Receptionists work under portraits of Hugo Chavez and Nicolas Maduro. Venezuela is currently in the throes of a political standoff between opposition leader Juan Guaido and Nicolas Maduro. (AP Photo)
Updated 28 January 2019
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Venezuela devalues currency to align it with black market

  • The announcement represents a huge about-turn by the socialist regime of Nicolas Maduro, which has imposed strict currency controls since 2003
  • Opposition leader Juan Guaido has been recognized as the legitimate interim president by a number of countries, including the United States

CARACAS: Venezuela devalued its currency by almost 35 percent on Monday to bring it into line with the exchange rate of the dollar on the black market.
The exchange rate is now fixed at 3,200 bolivars to the dollar, almost matching the 3,118.62 offered on the dolartoday.com site that acts as the reference for the black market.
Exchanges will now be provided by a technological platform operated by a private firm called Interbanex, which said it would operate a “supply and demand” exchange.
The announcement represents a huge about-turn by the socialist regime of Nicolas Maduro, which has imposed strict currency controls since 2003, all the while monopolizing foreign reserves.
That forced individuals and businesses to turn to the black market to get dollars — a necessity in a country wracked by an economic crisis marked by hyperinflation and shortages of basic necessities.
However, the black market rate for the dollar was 30 times the official rate, as the government artificially overvalued the bolivar.
Specialists have urged Maduro to abandon the policy of controlling exchange rates in order to combat the country’s economic crisis and inflation, which the International Monetary Fund says will reach 10 million percent this year.
The move comes at a time when Venezuela is also mired in a political crisis after parliament head Juan Guaido declared himself “acting president” last week.
Guaido was recognized as the legitimate interim president by a number of countries, including the United States, which has slapped tough economic sanctions on the Maduro regime.
Maduro has accused the US and Guaido of attempting to engineer a coup d’etat.
Consultant Asdrubal Oliveros, director of Ecoanalitica, says currency move has come too late.
“With the dynamic the country is in, this isn’t viable and it will make things worse,” he said.
In August, Maduro launched a series of economic reforms including devaluing the bolivar by 96 percent, but since then it has lost another 98 percent of its value.


India suspends Kashmir border trade with Pakistan

Updated 19 April 2019
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India suspends Kashmir border trade with Pakistan

  • Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries
  • India said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency”

NEW DELHI: India has suspended trade across its disputed Kashmir border with Pakistan, alleging that weapons and drugs are being smuggled across the route, as tensions simmer between the nuclear-armed neighbors.
Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries and brought the two countries to the brink of war with cross-border air strikes.
On Thursday, India’s government, which is in the middle of a tough national election, said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency.”
It also said many of those trading across the Line of Control, which divides Kashmir into zones under Indian and Pakistani control, had links to militant organizations.
The home ministry said trade would be suspended until a stricter inspection mechanism is in place.
The cross-border trade is based on a barter system, with traders exchanging goods including chillies, cumin, mango and dried fruit.
It began in 2008 as a way to improve strained relations between New Delhi and Islamabad, who have fought two of their three wars over the disputed region.
The Indian Express newspaper said Friday that 35 trucks carrying fruit traveling from the Indian side of the border had been stopped after the government order.
Trade on the border has been suspended before, including in 2015, when India accused a Pakistani driver of drug trafficking.
The latest move comes after India withdrew “Most Favoured Nation Status” — covering trade links — from Pakistan after the February attack, which was claimed by the Pakistan-based Jaish-e-Mohammed Islamist group.
Islamabad has denied any involvement in the attack.
India’s Hindu nationalist Prime Minister Narendra Modi has made national security a key plank of his re-election campaign, pointing to the recent flare-up of violence as he battles the center-left opposition Congress party.
He is seeking a second term from the country’s 900 million voters in the mammoth election which kicked off on April 11 and runs till May 19. The results will be out on May 23.