Venezuelan devaluation affects border trade

Venezuela announced on 8 February a devaluation of its currency the bolívar, in what a local economist termed a "confiscation" of Venezuelans' purchasing power that would also impact exporters from neighbouring Colombia, El Tiempo reported. The Colombian daily observed that traders in the frontier district of Cúcuta were waiting to see the devaluation's impact on demand in Venezuela for local products. Venezuela's Finance Minister Jorge Giordani told the press in Caracas on 8 February that the exchange rate of 4.3 bolívars to the USD was now 6.3, which made the dollar more than 46 per cent more expensive, El Tiempo reported. The daily stated that this was the bolívar's fifth devaluation since Venezuela's socialist government imposed currency controls in 2003. On Venezuela's black market the USD was reportedly trading for as much as 28 bolívars, signifying much higher prices for an array of imported consumer goods. As Venezuelans pointed out on networking websites, the devaluation of the official rate now signified a price hike of 46 per cent in imported goods. Giordani blamed speculation for the inflationary "bout" the country was suffering, but the opposition politician and governor of the state of Miranda Henrique Capriles accused the government of squandering its petrodollars, El Tiempo reported. He observed on the website Twitter that "oil is at 106 [USD per barrel] and they do a devaluation. They spent the money on their campaign, corruption and foreign gifts. Lying government!" In Cúcuta, a money changer told El Tiempo that the devaluation would impact supply and demand in the frontier zone. It might ensure an "abundance" of cheaper but mostly smuggled Venezuelan goods, while Venezuelan importers would be dissuaded from buying Colombian products that would soon cost more. The president of the Colombian exporters' association Analdex Javier Díaz told El Tiempo on 8 February that he hoped the market and inflation in Venezuela would soon absorb the rate change.