Venezuela's Economic Measures Leave Crisis Unresolved

Venezuela's new foreign exchange mechanism will likely lead to a minor devaluation of the bolivar, but it will not be enough to address the country's worsening economic crisis. The Marginal Foreign Exchange System, which was announced Feb. 10 and will take effect Feb. 19, will complement the country's low exchange rate, 6.3 bolivars to the dollar, and the existing Sicad mechanism, which trades at 12 bolivars to the dollar. According to an unconfirmed report, the new mechanism could trade the currency at around 130 or 140 bolivars to the dollar, figures more in line with the black market rate of nearly 190 bolivars to the dollar. More…