Long queues at the Central Bank of Bolivia after fears of lower dollar reserves

Bolivians are experiencing the scarcity of Dollars due to the decrease in Bookings of cash at the Central Bank of bolivianwhich fell to US$ 372 million compared to US$ 1,200 million compared to the same period of the previous year.

For these reasons, from the early hours of Wednesday, long queues began to form amid the growing fears of the public that rushed to convert their savings into dollars.

However, according to reports, most of the bank’s cash reserves are in gold, which cannot be easily converted into cash without a change in the law.

Because of it, the Bolivian central bank began selling dollars directly to the public this week to meet increased demand for the currency, which has been pegged to the dollar since 2008.

The authorities are also selling currency throughout the country through the state-owned Union Bank, according to the Bloomberg agency.

Also, near the headquarters of the Central Bank, black market vendors sold dollars at an exchange rate of 7.15 bolivianoshigher than the rate of the bank of 6.96, which shows a growing shortage of dollars.

“I need the dollars to protect my savings against anything that may happen”, Janeth Villca told El Cronista. She, like other Bolivians, arrived at the bank in the morning and was still in line at 6 p.m. “The problem is the fall in foreign reserves”said.

This trend is being experienced by Latin Americans, from Argentina to Venezuela, who often buy dollars to preserve their wealth when they worry about possible economic turmoil.

Added to this, foreign investors are also showing signs of nervousness and have abandoned the nation’s dollar bonds in recent days.

“Although liquid reserves are low, the central bank could monetize gold reserves if the assembly passes a pending law that allows it to do so”said Nathalie Marshallmanaging director of fixed income for Latin America at BNP Paribas to Cronista.

How are Bolivian bonds?

The fear of some Bolivians awoke when The Minister of Finance, Marcelo Montenegro, asked the population the week before to reduce the demand for dollars. The minister blamed speculation for the high demand.

Bolivian dollar bonds due 2028 fell 1.3 bolivian cents to 68.8 cents on Wednesday, pushing the yield to 13.49%.

When is Bolivia’s debt due?

It is important to note that after the expiration of a US$183 million bond last August, Bolivia’s next major payment is not until 2026, giving the government some leeway.

Given this, the president Luis Arcewho won the presidency in 2020 for the socialist MAS party, helped introduce the currency peg of roughly 7 to the dollar when he was finance minister in 2008.

These measures are fueled by natural gas exports, whose international reserves in Bolivia peaked at US$15.5 billion in 2014, equivalent to almost half of GDP.

With information from the Chronicler*