• The Central Bank of Bolivia is selling dollars directly to citizens in response to a speculative attack and increased demand.
• This is an extraordinary measure, taken to counter fears of devaluation and protect the national monetary system.
• Since March 6th, more than $91 million has been allocated through the traditional currency exchange market.
Central Bank of Bolivia Selling Dollars Directly
The Central Bank of Bolivia has announced that it will be selling dollars directly to citizens in order to curb what it is calling a speculative attack that has increased the demand for foreign currency. This rise in demand has been caused by several factors which led the population to believe there might be a devaluation move coming.
Measures Taken To Supply Internal Market
In order to supply its internal market with foreign currency, the Central Bank of Bolivia has implemented extraordinary measures since March 6th. Edwin Rojas, president of the Central Bank of Bolivia, stated that Banco Unión would collaborate with them in this process so those who are unable to obtain dollars outside can come and satisfy their demand from them.
Fears Of Devaluation
The increased demand for dollars faced by the central bank is due to fears about the current state of the national reserves, and how this can trigger a change in the exchange rate of the U.S. dollar. In Bolivia, there is a fixed exchange rate which establishes each dollar as valued at 6.86 bolivians – its fiat currency. Countries like Venezuela and Argentina have experienced elevated levels of devaluation and inflation due to these restrictions imposed on foreign currency exchanges..
Summary Of Market Reaction
On March 9th, Edwin Rojas released a summary on how the market reacted towards this measure: more than $91 million was allocated during the last two weeks in order to satisfy unprecedented demand for dollars from citizens. Despite analysts being uncertain about sustainabilityof these movements, Rojas reaffirmed that there were no plans for changing its monetary policy yet – as evidenced by February 8th’s report on foreign currency reserves amounting up too $372 million (less than $400 million estimated by local economist Antonio Saravia).
Conclusion
The Central Bank of Bolivia’s decisionto sell dollars directlyis aimed at countering speculation attacksand protectingthe nation’s monetary systemfrom potential devaluationscausedby lack offoreign currenciesin circulation– allwhile providing Boliviansthe abilityto acquireU.Sdollarswithout havingtodependon extreme measureslike those seenin Argentinain recent years