LatinNews Daily Report - 23 November 2012

ECONOMY | Black or Red Friday in Venezuela? The central bank president, Nelson Merentes, refused to comment on the mounting rumours of devaluation, insisting that “these are not themes that are discussed publically, but between the executive and the bank”. Earlier, Merentes was forced to deny on national TV that the central bank’s official mechanisms for the supply of US dollars, the Cadivi and the Sitme, which supply dollars at the official rate of BF4.2/US$ and BF5.3 respectively, were “paralysed”. The demand for dollars always rises this time of year in Venezuela but a sudden supply shortage in recent weeks has fuelled speculation the central bank is hoarding greenbacks ahead of a devaluation, typically announced over the New Year period when people are on holidays. The black market rate fell to a new low of BF14.0/US$ this week. With municipal elections due in April or May 2013, the left-wing government led by President Hugo Chávez may try to delay the pain of devaluation until the second half of 2013 for political reasons.  The 2012 fiscal deficit is estimated at about 15% of GDP.

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