UPDATE 2-Venezuela forex changes help but may not cure economy

martes 25 de marzo de 2014 17:31 GYT
 

(New throughout, adds details, concerns about volume, analyst comment)

By Brian Ellsworth

CARACAS, March 25 (Reuters) - Investors see Venezuela's new free-floating foreign exchange system as an important step toward improving the country's stretched finances, but economists question whether it can provide enough dollars to kick-start the economy.

The Sicad 2 mechanism opened on Monday and has offered dollars at around 51 bolivars, or eight times the official rate.

After 11 years of currency controls, critics said the launch of Sicad 2 amounts to a devaluation of 88 percent. Fitch Ratings cut its rating for Venezuela debt.

Still, Venezuela's bonds rose on Tuesday, extending gains from Monday as the measures encouraged investors. ID:nL1N0MM0PF]

It remained unclear how much the system will ease dollar shortages that left factories without replacement parts and consumers without basic goods including toilet paper.

"With no real efforts to significantly increase the supply of foreign currency, we suspect that it is another false dawn in Venezuela's battle to overcome a dollar drought," wrote David Rees of research firm Capital Economics in a note.

The measure offers companies such as American Airlines and Colgate-Palmolive a legal alternative to repatriate revenue. But that would imply heavy losses for the companies. Airlines, for example, sell tickets at the official rate but would repatriate funds at the much weaker Sicad 2 rate.   Continuación...