A Guide to Venezuela's Now Four-Tiered FX Rates

Just count 'em! How many bolivars do you need to exchange for 1 USD? Here's the handy-dandy IPE Zone guide for understanding the economic wasteland that is modern day Venezuela:

6.3 bolivars - official rate for "preferential" goods (read: largely for show; few can avail of it save for the well-connected).

11.36 bolivars - rate at the last weekly auction held for greenbacks known as "Sicad" (read: still not everyone can get into this auction).

??? bolivars - rate to be set at yet another round of auctions just announced that commentators dub 'Sicad 2.' Expectations are for the rate to be rather higher since only the Venezuelan government espouses that it has greenbacks left on an appreciable scale:

Maduro, who said that the new system would be known as “Sicad 2,” has blamed inflation and shortages on an “economic war” waged by the “parasitic bourgeoisie.” He gave businesses until Feb. 10 to cut prices to “fair” levels and reduce their profit margins to a maximum of 30 percent.

Venezuela will release $42.5 billion of foreign currency to the economy this year, including $11.4 billion through auctions in the Sicad system, as it tries to ameliorate dollar shortages that are causing irregular supply of imported goods ranging from shaving blades to milk. Maduro said yesterday that the country has sufficient foreign currency to meet its needs.

“There will be four exchange rates,” Asdrubal Oliveros, director of Caracas-based consultancy Ecoanalitica, said in a telephone interview. “When I hear Maduro say that Sicad 2 will be directed by the state, it makes me think that they are not going to let the rate float and that it will be at a weaker rate than Sicad 1, maybe around 25 bolivars per dollar.” 

86.92 bolivars - black market rate quoted (read: for the unlucky punters who fall into our category, which is everyone else.

Call me a lousy "parasitic bourgeoisie" even if I have no intention of holding bolivars, but why do I think 86.92 bolivars to the dollar is the only FX rate not plucked here from economic fantasyland? While we may be entertained by the utter folly of this four-tiered FX rate system, save a prayer for the people of Venezuela who are suffering considerable hardships from ruinous economic mismanagement.