Bolivia looks to calm dollar frenzy as shortage fears pressure FX By Reuters


© Reuters. People stand outside Bolivia’s Central Bank to buy U.S. Dollars, in La Paz, Bolivia March 7, 2023. REUTERS/ Claudia Morales


By Daniel Ramos and Monica Machicao

LA PAZ (Reuters) – Bolivia’s government is battling to calm fears among savers and businesses about a shortage of dollars in the country, which has led to long lines outside banks, rattled local bonds and pushed up the price of greenbacks in informal markets.

High global prices, falling gas exports and state spending to prop up the economy, has led some currency exchanges to run out dollars, sparking panic and further fanning concern.

“I am looking for dollars here because last week I went to the exchange houses in El Alto, but I couldn’t find any,” said Paulina Mayta, who was still searching for hard currency.

“Everyone tells me there aren’t any, there’s none left. I owe in dollars and I have to spend in dollars.”

Bolivia’s central bank has warned of unusually high demand for dollars and has offered to sell dollars directly at the official exchange rate of 6.96/6.86 bolivianos per dollar where it’s been pegged since 2011.

“The population that has not been able to satisfy their demand in dollars, either in the financial system or in the exchange houses, should come to the Central Bank of Bolivia,” central bank president Edwin Rojas said on Monday.

“Unfortunately we have warned that these speculative attacks persist, especially at the level of social networks.”

The landlocked South American country has seen net foreign currency reserve fall from a peak over $15 billion in 2014 to $3.8 billion at the end of 2022, hit by global inflation, weaker exports and spending to protect the currency peg.

The recent uncertainty has seen the cost of dollars rise to as much as 7.8 bolivianos in unofficial parallel markets, according to currency traders and Reuters checks.

Analysts said the central bank appeared to be moving to ensure the supply of dollars and would keep selling them to hold the official exchange rate steady, even though this risked burning through reserves further.

“We are going to guarantee the provision of U.S. dollars, people do not have to worry much,” BCB treasury manager Claudia Soruco said at a press conference on Tuesday.

“It is not necessary for people to make these long lines because they can come in over the next few days.”

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