Dollar Drops Against Venezuela's Bolivar In Parallel Market

The dollar in the Venezuelan parallel market continued its downward trend against the bolivar Tuesday as the government has been increasing the supply of greenbacks to prevent a possible increase in the price of U.S. currency. Traders said a dollar in the parallel market fetched around VEB3.2, down from VEB3.25 Monday. This is more than half the price a greenback fetched in December last year. The government recently sold more than $220 million in dollar-denominated structured notes composed of sovereign debt, mostly from Argentina, to supply the parallel market with U.S. currency. The Venezuela government pegs the dollar at an official exchange rate of VEB2.15 and has started to closely monitor the unofficial rate as many retailers use it as a gauge to set prices. Last year the unofficial rate more than tripled the peg and was named as one of the factors driving up prices. This year, the government has responded by increasing the sale of dollars at the official rate and simultaneously selling dollar-denominated structured notes allowing the buyers access to greenbacks at a higher rate than the official peg.