BCV intervenes for the 3rd time with US$30 million

BCV intensifies foreign exchange intervention: it sells $340 million in 10 days and accumulates $250 million in a week

Effects on the foreign exchange marketImpact on the market and the economy

Caracas, July 12, 2024 – For the third consecutive day, the Central Bank of Venezuela (BCV) intervened in the foreign exchange market, this time with an injection of 30 million dollars, raising the total sale to banks to $340 million in just 10 business days. This figure represents the largest foreign exchange intervention by the BCV so far this year and the highest for a similar period since 2019.

Aggressive intervention to contain pressures

The foreign exchange intervention of the BCV This occurs in a context of accelerated increase in monetary liquidity in recent weeks, driven mainly by public spending and the ongoing electoral process. This situation has generated pressure on the exchange rate, both in the official and unofficial markets.

In response to these pressures, the BCV has adopted an “aggressive” foreign exchange intervention strategy to contain the appreciation of the bolivar and defend the exchange rate anchor. This strategy has resulted in the sale of foreign currency to banks, which has allowed monetary liquidity to be reduced and pressures on the exchange rate to be relieved.

Effects on the foreign exchange market

The BCV’s foreign exchange interventions have had a mixed impact on the exchange market. In the official market, the price of the dollar has increased slightly (0.22%) so far in July. However, in the unofficial market the pressure has been greater, with the price climbing to levels above 2%.

Possible exchange rate adjustment following the elections

Experts suggest that following the electoral process, which ends on July 22, the BCV might make an adjustment to the exchange rate. This adjustment would imply a reduction in the selling pressure of foreign currency by the issuing entity, which might lead to a depreciation of the bolivar.

Impact on the market and the economy

The appreciation of the bolivar has raised concerns in some sectors of the economy, particularly in the export sector, as it makes exports less competitive. An exchange rate adjustment might help alleviate these concerns and stimulate domestic production.

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