Venezuela’s Exchange-Rate Gap Collapsed. Since August It Has Been Widening Again.

VENEZUELA · ECONOMY

For years the distance between Venezuela’s official exchange rate and the one people actually pay was the simplest measure of how little the official one meant. It shrank by three-quarters between March and early August — not because the bolívar got better — and it has been opening again for a month.

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Ask a Venezuelan what a dollar costs and, until recently, the honest answer was two numbers. There was the rate the Central Bank of Venezuela published, and there was the rate at which anyone could actually buy dollars. The distance between them — the brecha — has been the country’s most reliable economic indicator for a decade, because it measured something no official statistic would admit: how much of the official price was fiction.

That distance narrowed all year, reached its narrowest at the start of August — and has been widening again ever since.

The Rio Times took the daily parallel-market series for the bolívar from Yadio, a public exchange-rate aggregator, and set it against the central bank’s own daily reference rate across 122 trading days. In the first week of March the parallel rate sat 44 percent above the official one, peaking at 46.5 percent on 18 March. It fell through the spring, dropped sharply in July, and reached its narrowest point of the year on 6 August at 10.1 percent. Then it turned. Every trading day from 19 August onward has been above 14 percent, and on 4 September the premium stood at 17.2 percent.

What Changed on 1 July

The turn is generally dated to 1 July, when, according to the economist Asdrúbal Oliveros of Ecoanalítica, the BCV abandoned the single parity it had been setting for the month and moved to a rate fixed daily by the exchange desks of the banks themselves — letting the official rate track the market rather than lead it. The Rio Times could not find a central bank statement or a Gaceta Oficial entry announcing the change, and elements of the same mechanism appear in rate reporting from as early as the end of March. The date should be read as the point at which the effect became unmistakable, not as a documented decree.

The effect on the published rate was immediate. The official rate ended June at 623.02 bolívares to the dollar and July at 746.63, a fall of 19.8 percent in a single month. Over the same weeks the parallel rate went from 734.76 to 837.99 — a fall of 14.1 percent.

That asymmetry is the whole story. The gap did not close because the bolívar recovered. It closed because the official rate was allowed to drop faster than the street rate, until the two nearly met. Convergence by devaluation.

One honest qualification: the narrowing began before the switch. The premium had already fallen from around 35 percent at the end of May to 18 percent by 30 June. Either the market anticipated the change, or the central bank had begun moving the rate ahead of the formal announcement. The published series does not settle which.

What It Cost

Convergence of this kind is bought, not decreed. To keep the official rate credible the central bank has to supply the dollars that clear demand at that price.

The economist Tamara Herrera of Síntesis Financiera puts BCV foreign-currency sales at roughly US$9.2 billion between January and July 2026. Others differ: Manuel Sutherland estimates about US$7 billion for the first half alone, and Jesús Palacios describes a pace rising from around US$500 million a month to some US$1.7 billion. The central bank publishes no breakdown, so none of these can be checked against an official source. They are estimates, and they do not agree.

The government has presented the result as a success, describing a gap reduced from close to 30 percent to 12.3 percent within two months.

Why Economists Are Not Celebrating

The scepticism is not about the arithmetic, which is plain enough. It is about what happens when the money stops.

A premium held down by daily dollar sales lasts exactly as long as the dollars do. Sutherland, Herrera and Palacios have each argued that what matters is less the change of mechanism than the cost of defending it, and that the resulting equilibrium is artificial: if the flow of currency into the market thins — because oil receipts disappoint, because reserves are drawn down, or because the central bank simply chooses to stop — hedging demand returns and the parallel rate detaches again. On that reading the brecha has not been solved but suppressed, and the cost of the suppression is a stock of foreign exchange the country is spending rather than accumulating.

There is a second reading, less discussed. A narrow and stable gap is what a functioning single exchange rate looks like from the outside. If the BCV can hold the premium in the low teens through a quarter of ordinary oil revenue and without exhausting reserves, then Venezuela will have done something it has not managed since 2013: made its published exchange rate mean what it says.

The two readings were not distinguishable in July. They are becoming so now. Since 6 August the premium has climbed from 10.1 percent to between 17 and 19 percent, and it has stayed there for a month — the first sustained widening since the switch. That is what the sceptical reading predicts happens when the intervention thins. It is early, and a month is not a trend. But the number to watch is the one in the chart above, and it has started moving the wrong way.

What This Does Not Change

Nothing here makes Venezuelans richer. Between the end of January and the end of August the bolívar lost more than half its value against the dollar at the official rate. Inflation ran to 200.1 percent over the same eight months. And the physical currency remains almost absent: at the end of August the entire stock of banknotes in circulation was worth about US$125 million, or US$4.47 a head.

A narrower gap between two exchange rates is a change in how the price of money is set, not in what money can buy. For a household paid in bolívares it is close to invisible. For a company deciding whether to bring dollars into Venezuela and at what rate they will be converted, it is the most consequential thing that has happened this year.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error