Central Bank of Bolivia Selling Dollars Directly to Citizens as Devaluation Fears Rise

Central Bank of Bolivia Selling Dollars Directly to Citizens as Devaluation Fears Rise

The Central Bank of Bolivia is now selling dollars directly to citizens in order to curb what it is calling a speculative attack that has increased the demand of the population for foreign currency. This rise in demand has been caused by several factors which led the population to believe there might be a devaluation move coming. Central Bank of Bolivia Sells Dollars to Appease Local Market

The Central Bank of Bolivia is executing extraordinary measures to supply its internal market with foreign currency. On March 6, the monetary institution announced that it would start selling dollars to the citizens directly, adding its action to the established traditional currency exchange market.

The measure would counter what the central bank is calling a “speculative attack” on the national monetary system, prompting Bolivians to purchase more dollars in order to protect from a rumored increase in the exchange rate. Edwin Rojas, president of the Central Bank of Bolivia, stated: The Central Bank of Bolivia opens its doors, we reiterate, through Banco Unión, since it is the body that is going to collaborate with us in this process so that the population that demands dollars and cannot get them (outside) can come to us to satisfy their demand. Fears of Devaluation

The increased demand for dollars that the central bank is facing has to do with fears about the current state of the national reserves, and how this can trigger a change in the exchange rate of the U.S. dollar.

In Bolivia, there is a fixed exchange rate, set back in 2011, that establishes each dollar is valued at 6.86 bolivians, the fiat currency of the country. Countries like Venezuela and Argentina, which had established exchange controls on foreign currency, have experienced elevated levels of devaluation and inflation due to these restrictions.

On March 9, Rojas gave a summary of how the market was reacting to this measure, noting that more than $91 million was allocated during the last two weeks to satisfy the unprecedented demand. He explained that the country had no plans for changing its monetary policy.

However, analysts are uncertain about the sustainability of these movements. The last report on the status of the foreign currency reserves dates from February 8, when the central bank reported having $372 million. This is less than the $400 million that Antonio Saravia, a local economist, estimates that the national market needs monthly. He doubts the government can sustain this level of intervention for too long. Tags in this story bolivia, bolivians, central bank of bolivia, Devaluation, exchange control, foreign currency, reserves, speculative attack, U.S. Dollars

What do you think about the Situation that the Central Bank of Bolivia is facing with unprecedented demand for U.S. dollars? Tell us in the comments section below Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved. Steve Forbes Says the Fed Is "Inflicting Unnecessary Pain" With Interest Rate Hikes ECONOMICS | 1 day ago Expert Warns of Possible Deflationary Depression as Money Supply Contracts: "Pay Attention to QT and the Money Supply" ECONOMICS | 2 days ago

Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleBlockchain.com Shutters Asset Management Subsidiary Amid Crypto Winter and Industry Turmoil Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItCentral Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year

The Central Bank of Brazil has confirmed that the institution will run a pilot test regarding the implementation of its proposed central bank digital currency (CBDC), the digital real. Roberto Campos Neto, president of the bank, also stated that this ... read more.Draft Law Regulating Aspects of Crypto Taxation Submitted to Russian Parliament NFT Sales Volume Saw a Small Uptick This Week — Moonbirds, Mutant Apes Take Top Sales Bill ‘On Digital Currency’ Caps Crypto Investments for Russians, Opens Door for Payments Survey: Adoption in Argentina Grows, With 12 out of 100 Adults Having Invested in Crypto