Bolivia is fighting to assuage the fears of savers and businessmen over the shortage of dollars in the country, which has caused long lines outside banks, shaken local bonds and pushed up the price of the currency in informal markets.
The panic, triggered by the sharp drop in central bank reserves in recent years due to rising international prices, the drop in gas exports and increased public spending to prop up the economy, has caused some exchange houses to run out of dollars, further reinforcing concern.
“I am looking for dollars here, because the previous week I went to the exchange houses in El Alto, but there is nothing”, said Paulina Mayta, who was still looking for foreign currency. “Everyone tells me there isn’t, there isn’t. I owe in dollars and I have to return dollars”.
The central bank of Bolivia (BCB) has warned of an unusually high demand for dollars due to “speculative attacks”, and has offered to sell dollars directly at the official exchange rate of 6.86/6.96 bolivianos per dollar, which has been fixed since 2011.
“The population that has not been able to satisfy its demand in dollars, either in the financial system or in the exchange houses, that comes to the Central Bank of Bolivia”, said the president of the central bank, Edwin Rojas, on Monday.
“Unfortunately, we have warned that these speculative attacks on social networks persist”.
The South American country has seen its foreign exchange reserves fall from a peak of just over $15 billion in 2014 to $3.8 billion by the end of 2022, amid rising global inflation, weaker exports and spending to protect the parity of the currency.
Recent uncertainty has caused the dollar to rise to 7.8 bolivianos in unofficial parallel markets.
Analysts say the central bank appears to be acting to secure the supply of dollars and would continue to spend them to keep the official exchange rate stable, even if this means further liquidating reserves.
“We are going to guarantee the provision of US dollars, you do not have to worry much”, BCB treasury manager Claudia Soruco said at a press conference on Tuesday.
“It is not necessary for the population to make these long lines because they can come in the course of the following days”, he assured.
Source: Reuters
Source: Gestion
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