No End To Venezuela's Gloom, Whether It's Currency Or Killings
Venezuela just finished another terrible, horrible, no-good, very bad week on both the financial and security fronts. And it suggests things could get even worse.
The country’s economic tailspin hit a dark milestone: The black market exchange rate for its currency, the bolívar, is now more than 100 to the U.S. dollar. That’s an alarming 60 percent drop in value for the year. But it’s also a reflection of depleted foreign reserves, hyperinflation and an oncoming recession. Venezuela has the world’s largest oil reserves, but an inordinate share of its oil revenues is being used to pay debt. Economists as a result fear the country could be headed toward debt default.
“The risk of default is very high,” says Venezuelan economist Juan Fernández with Escudo Consulting in South Florida. “The Venezuelan government doesn’t have enough foreign currency to supply the market. So you are really in an economy with a very black hole in the near future to be solved.”
The situation is aggravated by Venezuela’s violent crime crisis. That was driven home last Thursday when Robert Serra, a congressman for the ruling Socialist Party, was found stabbed to death in his Caracas home. His wife was also killed in the attack.
Venezuela has the world’s second highest homicide rate today.