Venezuela: Chávez bans brokerages
President tries to eliminate parallel FX market; Claims irregularities taking place
Chávez announces his threat to close brokerages on his weekly TV programme Alo Presidente
Hugo Chávez, the president of Venezuela, has decided to ban securities brokerages to try to curb the parallel foreign exchange market and to stem the sharp depreciation of the country’s currency, the bolivar, this year. During an appearance on state television on May 14, Chávez said he was prepared to close the brokerages – the larger of which are controlled by the nation’s main banks. He sees this as an essential measure for maintaining foreign exchange controls. The drastic step provoked fears that imports might be severely hindered, pushing inflation even higher and leading to further shortages of basic goods.
The government says it will introduce a new trading band for the bolivar’s value, in a market that has never been regulated before. The crawling band is expected to be between five and seven bolivars per US dollar. The government says it will continue an investigation into what it perceives to be irregularities among brokerages, which came to light following recent raids on several financial institutions’ offices.