Venezuela: New currency exchange system to begin on May 23

Event

On Tuesday, May 16, President Nicolás Maduro announced that a new version of one of Venezuela's two currency exchange systems, Dicom, would be operational beginning on May 23. The new auction system will allow Venezuelan bolívars to be exchanged for foreign currencies through auctions. Maduro did not provide further details about the system or the new exchange rate for US dollars. Maduro has previously stated that currency auctions would happen bi-weekly.

According to President Maduro, the revamped system is intended to address the "economic war" between Venezuela and its adversaries.

Context

Venezuela has used strict currency exchange controls since 2003 to prevent the outflow of domestic capital. The current exchange system Dipro is used mostly for the purchase of food and medicine and has maintained a US dollar-bolívar exchange rate of 1 to 10. Dicom is used for any individual or institution that does not qualify for Dipro and currently has a floating US dollar-bolívar exchange rate of 1 to 708.

Venezuela’s current economic upheaval comes as the country is facing ongoing political violence amid a long series of crises affecting the restive country in recent months and years. The situation is worsened by major shortages of gasoline, medications, food, and other basic necessities, an alarming spike in rates of violent crime, massive inflation and economic recession, and a resurgence of disease.

Advice

Individuals in Venezuela are advised to closely monitor the situation, to avoid all protests due to the likelihood of violence, to remain vigilant at all times due to high crime rates, and to avoid discussing political issues in public.​