VEF*: The Calm Before The Storm

Despite the positive impact of the recent oil rally and PdVSA bond issue, the Venezuelan black market bolívar remains fundamentally flawed. Ultimately, a lack of fiscal options will still require a painful external adjustment, leading us to believe that the parallel exchange rate will head considerably lower regardless of whether an official currency devaluation materialises. Short-term, we are targeting a move through the all-time low of VEF* 6.8000/US$ set back in late April.

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