2023-04-22 03:48:21
The Bolivian population is not only concerned regarding the rapid reduction in reserves, but also the fact that since February the number of reserves has not been officially updated to date.
Of the total RIN reported in Bolivia as of February, 10.5% (US$372 million) was in Dollars (69% less than in February 2022), 15.2% (US$538 million) in Special Drawing Rights (DEG), and 73.5% (US$2,592 million) in reserves of oro (physicist).
However, to date, the highland country has exhausted its available cash in dollars and used 99% of its SDRs, so it only has to try to monetize the gold ounces in the international market.
Given this situation, the informal (unregulated) dollar market has strengthened rapidly.
Months ago, this market offered an exchange rate (sale) of 7.20 bolivianos per dollar, but currently it reaches 7.70 or 7.80. These prices are much higher than the official exchange rate (fixed exchange rate) that governs the highland country.
This fixed exchange regime forces the BCB or commercial banks to buy dollars at 6.86 bolivianos -per unit of the green ticket- and sell them at 6.96, economist Carlos Delgadillo, associate professor at the Bolivian Catholic University of San Pablo, refers to Gestión.
READ ALSO: Dollars, the hardest thing to find in all of Bolivia
What is the current situation in Bolivia and who buys soles in that country?
Jorge Akamine, president of the Bolivian National College of Economists (CONEB), told this newspaper that Bolivia it is experiencing a run on dollars that has not stopped and will continue.
While these measures are being discussed, many Bolivians linked to the trade sector are going to the border with Peru to exchange their bolivianos for soles, he revealed.
“What Bolivians are doing is taking refuge in a strong currency that allows them to preserve their savings and assets. Likewise, what is known as monetary triangulation is also being practiced. In other words, Bolivian citizens exchange their currency for soles, so that following a while they can buy dollars without losing wealth,” Akamine said.
READ ALSO: The Economist: Bolivia, on the verge of a crisis with its bankrupt economic model
So far this year, the dollar has fallen 1.10% in Peru, from S/ 3,805 to S/ 3,765, that is, the sol has appreciated once morest the US currency to the same extent. In fact, the sol is one of the most stable currencies in the region, according to the Central Reserve Bank (BCR).
In this way, given the shortage of dollars in that country, Bolivians are turning to the sol as a means to preserve the value of their capital and prevent it from being reduced in real terms with the devaluation of their currency, Akamine mentions.
He explained that this situation is similar to that experienced in previous years, when Argentines bought Bolivian currency on the border with that country to maintain their purchasing power amid the shortage of dollars in the River Plate nation.
“Bolivians, given the economic problems in that country and the control of its exchange market, seek to preserve the value of their capital or surplus by buying dollars; butin the absence of these, they opt for options such as the Chilean peso and the Peruvian sol, currencies that are among the most stable in the region, ”says in Peru, the docentity of the University of Piura, Yang Chang.
The purchases of soles by Bolivians may have some favorable effect on the Peruvian money market, he opined. Thus, he estimated that the demand for soles abroad would translate into certain appreciation pressures on the sol (dollar decline in Peru), although in a limited way.
READ ALSO: Analysts and companies foresee a drop in the dollar, why don’t the banks?
What would be the implications of the demand for soles in Bolivia for Peruvian monetary policy?
Jorge Chávez, executive president of the consultancy Maximixe, maintains that the purchase of soles by Bolivian citizens is a demand factor that should be closely measured in order to have a more accurate assessment of its real impact on Peruvian monetary policy.
However, a priori, taking into account the size of the Bolivian economy, its low level of reserves and its international liquidity, the impact should be attenuated, for now.
What alternatives are being considered in Bolivia?
The nationalization of natural gas in Bolivia in 2006 marked a turning point for its economy. Although these resources were used intensively for social programs, they might not be replenished because, as foreign investors moved away from the gas sector, there were no new investments or hydrocarbon discoveries. Bolivian gas exports decreased significantly and caused a lower income of dollars to that country.
Now, to counteract the dollar shortage, the Executive power Bolivian has proposed up to three legislative measures. The first has to do with the approval of a bill in the Legislative Assembly to allow the Central Bank to sell its gold reserves in the international market. The second is pending, and consists of the approval of credits for up to US$ 800 million with the Inter-American Development Bank (IDB). And the third measure being evaluated is a request for financing from the International Monetary Fund (IMF).
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