How Venezuela is devaluing its currency "through the backdoor"

The Venezuelan government is currently embarked on a strategy of devaluing its heavily overvalued local currency "through the backdoor," according to a report from Capital Economics. The official exchange rate is 6.3 bolívares per US dollar while reports say that on the black market the local currency has weakened to around US$64, a discount of more than 90% due to the severe shortage of dollars in the troubled economy. Several investment banks expect the government to announce a major devaluation of the local currency in the near term, but Capital Economics argues that the government has already launched an unofficial devaluation process and believes that the official exchange rate could be left intact/ More...