Purpose - The Aim Of This Paper Is To Address The Following

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Purpose - The aim of this paper is to address the following question: Should Venezuela unify the dual exchange rate mechanism in favour of a free-floating exchange rate regime?
Findings – In my analysis, I argue that the negative economic impact of having a dual exchange rate regime cannot be neglected and that Venezuela should abandon the one-fixed-one-floating rate system.
Originality/ value – Venezuela implemented the dual exchange rate system in March 2016; because of this, there is empirical research into the implications of this arrangement.
Research limitations/ implications – This paper does official data from the Venezuelan central bank as official figures are not published by this entity.

Introduction (155)
Venezuela is
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The former coexists with a floating rate (DICOM ) which stands at 701.50 Bs. per USD and is available for products and services classified as non-essential (op. cit.).
A possible explanation as to why the Venezuelan government has opted for this dual system can be found in the work of Marion (1994, p. 213) who explains that countries adopt said mechanism in an “attempt to insulate their economies from the effects of international capital movements”.
While some researchers have concluded that the one-fixed-one-floating rate system, helps countries protect their international reserves ( See Lai & Chu, 1896, p. 507) and helps maintain inflation low; others, who have conducted country-specific analyses, extensively expose the drawbacks and economic distortions arising from this mechanism (See Hori & Chin Wong , 2008) .
Kiguel and O 'Connell (1995), have written one of the most comprehensive studies to date on the topic of dual exchange rate systems in developing countries. They posit that, although dual exchange rates are not strange arrangements in emerging countries, given their limited effectiveness, they are “often liberalized at some point in favor of a unified foreign exchange market” (op. cit.).

In order to answer the research question, it is imperative to evaluate the economic impact of the current exchange rate regime.
As of March 13th 2017, the parallel premium in Venezuela stands at 7015%. The astronomical figure
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