Tuesday, September 22, 2015

A WORD TO THE WISE ON VENEZUELA AND RISK: CURRENCY SINKS TO RECORD LOWS


If you are not paying attention to the financial situation in the Bolivarian Republic [sic] of Venezuela, the local currency, the Bolivar, sunk to record lows on the unofficial, parallel market. One US Dollar now commands 730.65 Bolivars, meaning that on Bolivar is now worth less than 1/7 of one cent.

Needless to say, for Country Risk purposes, any new exposure of capital, including building a brick-and-mortar presence, is not recommended, and those companies and individuals who actually hold dollars may have obtained them through illicit (i.e. drug trafficking) sources pose a clear and present danger to do business with. In short, stay out of the Venezuelan economy for the short-term, especially including any entities flush with dollars.

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