The Venezuelan professor and economist, Hermes PérezIn a recent thread through Twitter, he spoke about exchange rate instability and inflation in Venezuela, and pointed out that the continuous rise in both was due to the excessive issuance of money or monetary financing to the treasury.
In that sense, according to Perez The cause of hyperinflation in Venezuela and the rise in prices that occurred in the country since last May is due to monetary financingwhich mentioned that it is prohibited by the Venezuelan Constitution and the Law of the Central Bank of Venezuela (BCV).
In addition, He also took the opportunity to remember that Venezuela, by presenting 3-digit inflation, is in a category of “High Inflation”therefore, the way to share it is different from inflation of less than 3 digits.
Finally, Pérez raised the possibility that In case of continuing to bet on the increase in monetary financing and the excessive issuance of money, the exchange rate can close the year, even with a rise of up to 200% of what it is currently (25 Bs/USD).
“As of 01/20, monetary financing, the amount of money lent to the treasury, increased 18%, according to official data. This was equivalent to an astronomical value of Bs 13 billion. Thus, there is no way for the TC and prices to stabilize. In parallel, monetary liquidity has grown 20% and the TC 41%”Perez said.
Source: Twitter Econ. Hermes A. Perez F.
“If it continues like this, the TC will close the year at Bs 75, with minimums and maximums of Bs 65 and Bs 86, per dollar”he added via Twitter.
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