Expect More Black-Market Bolivar Weakness

We have long argued that the Venezuelan black-market bolivar would face strong depreciatory pressures owing to declining oil revenues, a decaying non-oil sector, and a heavy reliance on staple goods imports. The rate is now at VEF6.1500/US$, having fallen from a high of VEF3.3000/US$ in August 2008 (at which point we maintained that currency strength would be transitory), and we believe that further depreciation is to come. With the cash-strapped government increasingly reluctant to extend dollars at the official rate to industries outside healthcare and food, and state-oil firm

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