Venezuela Sells More Dollar Bonds
Zimbabwe Ben can't even give the stuff away at this point but he's sure going to try. It makes one wonder if old ZB has more pull on a global scale than it appears or maybe it's just that the rest of the world understands that the dollar is getting flushed and hard.
I'll take what's behind Door #2.
Hit the deck, this is going to get ugly. Or I guess your other alternative would be to grab your gold (you do have some, don't you?) and find a nice little island on which to spend the remainder of your days. I'll be in Nicaragua myself, so good luck with all that. Send a carrier pigeon if you need me.
Venezuela plans to continue selling dollar-denominated bonds and push the financial sector to increase lending in a bid to boost sagging economic activity and prop up the local currency.
State-oil company Petroleos de Venezuela SA (PdVSA) will probably follow a $5 billion bond sale by the government with its own issue, Finance Minister Ali Rodriguez said Thursday after a joint press conference with Planning Minister Jorge Giordani and central bank President Nelson Merentes.
Rodriguez said the conditions and amounts for the bond offer are still being analyzed.
The measure is part of the government's efforts to bolster the bolivar in an unofficial market for U.S. currency that has become an essential lever for the Venezuelan economy. Merentes said the so-called parallel rate should have a ceiling of about VEF4.
The dollar currently fetches around VEF5.3 in the parallel market, twice the official VEF2.15 peg. Dollar requests by companies and individuals are being increasingly turned down by the government, which is facing a dollar shortage amid a steep fall in oil prices from their 2008 record highs.
The bonds, which are sold in bolivars to local investors who can then turn around and sell them abroad for dollars, helped bring down the parallel rate to a high of almost VEF7 in August.
"We are looking for some rationality so the (unofficial rate) doesn't have a negative economic influence," said Merentes. The parallel rate was partly blamed for a 2.4% economic contraction in the second quarter by making more expensive imported materials for the manufacturing industry.
Alejandro Grisanti, director of Latin America research at Barclays in New York, said he doubts the government can bring the parallel rate down to VEF4 for $1 if it only does random, mega-bond placements such as the $5 billion dollar-denominated sale last week.
Beyond the bond sales, market observers say the government also frequently intervenes in the parallel market in an unofficial fashion, selling dollars to boost the bolivar.
Great job, ZB, I think your plan to destroy the dollar can be considered an overwhelming success.