Venezuela Hikes Reserve Requirements in Anti-Inflation Push

Venezuela took a bold move on Monday to attack hyperinflation and a persistently weak black market exchange rate that threatens to quickly derail a recent devaluation and re-denomination of the bolivar. Banks will be asked to deposit 100 percent of their “legal reserve requirements” with the central bank, up from 30 percent, according to Central Bank President Calixto Ortega. The move, which will apply to all deposits coming in after September 1, is designed to fight inflation and stabilize prices, he said. The measure is expected to be published in the official gazette in the coming days. “This is a measure to absolutely restrict liquidity,” said Cesar Aristimuno, director of Caracas-based banking consultancy Aristimuno, Herrera y Asociados. “The banking sector will become stagnant because it won’t receive money to cover its costs.” More…