Venezuela narrows exchange rate gap amid earthquake aftermath

Venezuela has reduced the gap between its official and black-market exchange rates to 17%, down from 30% before two devastating earthquakes on June 24. The government has injected more than $7 billion into the local market since January, selling dollars from oil revenues under a program monitored by the US, while simultaneously allowing the official rate to depreciate faster Source: la República, Infobae. The move aims to stabilize the currency and curb inflation, but economists warn it is not a lasting fix.

Earthquake impact

The earthquakes, which killed 3,685 people according to National Assembly head Jorge Rodríguez, added economic strain. Increased demand for basic goods in June likely reduced bolívar demand, while an influx of humanitarian dollars may have further narrowed the gap Source: Infobae. The central bank now trades at around 686 bolívares per dollar, an 11% depreciation since the quakes.

What's next

"The crucial question is what happens once the two rates converge," said Tamara Herrera of Síntesis Financiera Source: la República. Authorities continue tightening liquidity, requiring banks to hold 73% of reserves at the central bank. Meanwhile, economist Luis Vicente León cautioned: "This doesn't mean the problem is over" Source: Infobae.