Post by ukipa on Mar 9, 2012 19:01:02 GMT 4
Forced to contain inflation, the Central Bank of Venezuela (BCV) raised foreign currency supply through the Transaction System for Foreign-Currency Denominated Securities (Sitme) to facilitate imports and to normalize supply of goods.
At Sitme, importers buy State or Pdvsa-issued US dollar-denominated bonds in bolivars in order to resell them abroad and obtain US dollars at an exchange rate of VEB 5.30.
Between January 1 and March 6h, companies have bought bonds on the order of USD 1.72 billion from Sitme. This amount is 31% higher than in the same period of 2011.
When enterprises sell bonds abroad, they have to accept a discount on the securities' prices.
In a report on the subject, financial firm Síntesis Financiera stated that taking the aforementioned discount into consideration, the companies obtained USD 589 million though Sitme. This sum exceeds by 11% and 42% the amounts recorded in January and February 2011, respectively.
Increased supply of bonds is not the only factor. International investors have started investing in riskier assets, thus pushing up the value of Venezuelan securities significantly throughout the last four weeks.
Tamara Herrera, the chairwoman of Síntesis Financiera, explains, "We have worked under the assumption that supply at Sitme will increase in order not to harm international reserves."
Herrera added that "in order for Sitme to keep supply, it needs bonds. And, according to our estimations, the existing bonds would end April and May at their current level. Thereafter, a new bonds issue should be made or Pdvsa should deliver securities to the central bank."
On par with Sitme there is the Foreign Exchange Administration Board (Cadivi), the government body that sells US dollars at an exchange rate of VEB 4.30 per USD.
Venezuela needs to allocate a larger portion of US dollars for imports through Sitme because the central bank's cash reserves to be sold through Cadivi have declined dramatically in the first few months of this year.
The BCV is not receiving most of the petrodollars. Working reserves or cash foreign currency to meet imports ended last year at USD 5.59 billion. This represents a significant drop of 86.2% in comparison to 2008 and is the lowest amount since 1997.
Síntesis Financiera's estimates show that working reserves have continued to drop and they may have ended February at USD 3 billion. This amount meets less than a month of this year's estimate.
At Sitme, importers buy State or Pdvsa-issued US dollar-denominated bonds in bolivars in order to resell them abroad and obtain US dollars at an exchange rate of VEB 5.30.
Between January 1 and March 6h, companies have bought bonds on the order of USD 1.72 billion from Sitme. This amount is 31% higher than in the same period of 2011.
When enterprises sell bonds abroad, they have to accept a discount on the securities' prices.
In a report on the subject, financial firm Síntesis Financiera stated that taking the aforementioned discount into consideration, the companies obtained USD 589 million though Sitme. This sum exceeds by 11% and 42% the amounts recorded in January and February 2011, respectively.
Increased supply of bonds is not the only factor. International investors have started investing in riskier assets, thus pushing up the value of Venezuelan securities significantly throughout the last four weeks.
Tamara Herrera, the chairwoman of Síntesis Financiera, explains, "We have worked under the assumption that supply at Sitme will increase in order not to harm international reserves."
Herrera added that "in order for Sitme to keep supply, it needs bonds. And, according to our estimations, the existing bonds would end April and May at their current level. Thereafter, a new bonds issue should be made or Pdvsa should deliver securities to the central bank."
On par with Sitme there is the Foreign Exchange Administration Board (Cadivi), the government body that sells US dollars at an exchange rate of VEB 4.30 per USD.
Venezuela needs to allocate a larger portion of US dollars for imports through Sitme because the central bank's cash reserves to be sold through Cadivi have declined dramatically in the first few months of this year.
The BCV is not receiving most of the petrodollars. Working reserves or cash foreign currency to meet imports ended last year at USD 5.59 billion. This represents a significant drop of 86.2% in comparison to 2008 and is the lowest amount since 1997.
Síntesis Financiera's estimates show that working reserves have continued to drop and they may have ended February at USD 3 billion. This amount meets less than a month of this year's estimate.
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