Don’t you love the way Nick Maduro crushed the money-changing mafias of Cúcuta? Back during Cienbologeddon, only a month ago, he withdrew the 100-bolívar notes. At the time the bolívar had just spiked to an all-time high of 4,500 to the dollar before it settled back into the range of 3,500 or so.
Maduro’s “brilliant” strategy cost the country a city or two, but Ciudad Bolívar is way off the main thoroughfares around Caracas anyway, so in all likelihood no one would notice. Plus it worked! The price of the bolívar strengthened against the dollar.
Granted, that was a month ago. The price in Cúcuta is 3,700 y pico and rising. In other words, writing off Ciudad Bolívar bought us a month or so, so it’s all good. It was all worth it for the magic trick of making all the 100 bolo notes disappear. Except they’re still in circulation.
Once again, the market wins.
So it was time for other measures. That’s where ItalCambio comes in. New Forex Bureaus, we’re told, will spring up all around the Venezuela-Colombia border. Except they don’t seem to exist yet. And their coming into existence at all is, well, sort of a big question mark.
The Italcambio link took me right back where I started: to the Google search page. Eventually I got to a page like so many others of the Bolivarian government: crammed with beautiful, tantalizing, but dead, links that lead to pages like this. But we’re told that they’re going to resolve the dollar problem and this time, the mafias, that is to say, the markets, will definitely be defeated.
Once again, the market wins.
As far as we can tell —and that’s not very far at all— the goal is to open up yet another price for the dollar. On the border, 750 bolos will buy you dollar, provided you jump through some as-yet-unspecified bureaucratic hoops. That’s a bit more expensive than through Dicom/Simadi/whatever they’re calling it this week (Bs.677, at last count) but still way, way cheaper than the parallel rate.
Which means the arbitrage opportunities are still there: if you can turn Bs.750 into $1 at the border forex bureau, you can turn $1 into Bs.3,700 in Cúcuta, then turn those Bs.3,700 into $5 back at the Forex bureau: lather, stew, repeat, forever.
In a display of incredible pathos, the new Finance Minister and Vice-president for Economic Policy Ramón Lobo tried to sell us this steaming turd-pile on the border as a measure to reel in the parallel dollar rate. They’ve learned nothing. Nothing.
It’s the same old story, again and again, until the end of times. The government keeps trumpeting “reforms” that are exactly the same as the reforms they unveiled six months ago and eighteen months ago, and thirty months ago, and keeps repromising a final victory against the evil forces of supply and demand again and again like they’re Dory, totally unaware of what’s come before.
Marxists like Maduro might think they’re through with the market, but the market’s sure not through with them.Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.