Maduro announces yet another FX system for Venezuela

Venezuelan President Nicolás Maduro has announced yet another FX system for the troubled country.

The government launched a new foreign currency regime last month with two official exchange rates that was widely seen as an unofficial attempt to devalue the heavily overvalued local currency.

In this system, the exchange rate coming out of weekly FX auctions (known as Sicad) is the currency band's ceiling, while the floor is made up of the current official exchange rate of 6.3 bolívares per US dollar. And this system will also see the Sicad mechanism grow in importance as an increasing number of economic activities and transactions use these exchange rates.

Maduro has now said that the authorities will soon implement a complementary FX system to Sicad, which he called "Sicad 2," with the objective of increasing the supply of US dollars in the economy. Along these lines, state news agency reported that individuals and private sector companies would be allowed to sell dollars at special Sicad auctions.

The move to a system with dual exchange rates was seen as an attempt by the government to tackle the growing and daunting problem of a local currency that is heavily overvalued, dollar shortages and rampant inflation.