March 24, 2014 / 2:32 PM / 5 years ago

Venezuela says to start new foreign exchange system on Monday

CARACAS, March 24 (Reuters) - President Nicolas Maduro’s government plans to begin a long-awaited new foreign exchange system on Monday in an effort to tame Venezuela’s black market for U.S. dollars and increase the flow of greenbacks to local businesses.

Authorities have missed several previously-announced dates to launch Sicad 2, but over the weekend the country's central bank published operating details in a sign technocrats were getting close. (here)

State media also reiterated officials’ announcement last week that the system would begin on Monday.

The new Sicad platform will add a third exchange rate to 11-year-old currency controls that sell dollars at 6.3 bolivars for preferential goods and around 11 bolivars for other items.

Officials say it will help lower the price of dollars on the black market, where greenbacks currently are fetching around 57-58 bolivars, compared to 85 a couple of weeks ago.

Dollars can be offered in cash or bonds via Sicad 2 at a price above the other two official rates, but lower than the black market rate. Officials say the system will operate daily, and that businesses and individuals can take part.

Economists have speculated that the price of the dollar via Sicad 2 could vary anywhere between 20 and 50 bolivars.

“It is going to cover seven, eight percent of real (dollar) demands, seeking equilibrium as regards the flow of foreign currency necessary for the functioning of the economy,” Maduro said in a speech on Friday. (Reporting by Deisy Buitrago; Writing by Andrew Cawthorne; Editing by Daniel Wallis and Paul Simao)

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