Скачать презентацию The Venezuelan Bolivars Black Market Ari Wardana 0849013 Скачать презентацию The Venezuelan Bolivars Black Market Ari Wardana 0849013

ee6c7b0ac2bb3898316124abc6c3c757.ppt

  • Количество слайдов: 14

The Venezuelan Bolivars Black Market Ari Wardana 0849013 Mochammad Hamzah Fanzurry 0849039 Yohanes Andy The Venezuelan Bolivars Black Market Ari Wardana 0849013 Mochammad Hamzah Fanzurry 0849039 Yohanes Andy Seputro 0849057

Case Overview • The Reign of Chavez • Venezuelan Currency “Bolivar” – January 21 Case Overview • The Reign of Chavez • Venezuelan Currency “Bolivar” – January 21 st, 2003 Closed at 1. 891, 5/US$ – Venezuela yearly inflation rate touch 30% – Foreign Exchange trading stopped for 2 weeks – The rise of black market trading for FOREX • Chavez Economic Policy

Capital Control dan CADIVI • The Passage of the 2003 Exchange Regulation Decree (February Capital Control dan CADIVI • The Passage of the 2003 Exchange Regulation Decree (February 5 th, 2003) 1. Set the official exchange rate Bs 1596/$ (bid) and Bs 1600/$ (offer) 2. Established the Commission de Administracion de Divisas (CADIVI) 3. Implemented strict price control

Grey Market • Local Venezuelan investors are allowed to purchase local shares of CANTV Grey Market • Local Venezuelan investors are allowed to purchase local shares of CANTV (Local telecommunication company) • CANTV was dual listed in NYSE • There was a loophole to avoid foreign exchange curb • Practice : – Local Investor bought CANTV local shares at local stock exchange convert it to American Depository Receipts (ADRs) which denominated in US$.

Grey Market Grey Market

Black Market • Sophisticated practice using services from local stock broker or banker who Black Market • Sophisticated practice using services from local stock broker or banker who simultaneously held US$ account offshore. • The exchange rate of foreign currency was negotiated on the day of the deposit • The rate usually was within a 20 % band of the grey market rate • The transaction took two business day to settle • For example in February 6 th, 2004 the exchange rate was Bs 3300/$

Venezuela in early 2004 • President Chavez ask Venezuelan central bank to give him Venezuela in early 2004 • President Chavez ask Venezuelan central bank to give him fund from it’s foreign exchange reserves to be invested in agricultural sector. – The request was denied • February 9 th, 2004 – The Venezuelan Government announced the devaluation of Bolivar for 17% from Bs 1600/$ to Bs 1920/$. • The devaluation of Bolivar meant that the country’s proceeds from oil export grew by the same number as the devaluation (17%). • Venezuelan government actually had significant control over it’s balance of payments.

Santiago’s Problem • A business man in pharmaceutical distribution • Need US$30. 000 to Santiago’s Problem • A business man in pharmaceutical distribution • Need US$30. 000 to fulfill the payments of his supply. • Legal approach (CADIVI) resulting only US$10. 000 approved for transaction @ Bs 1920/$ – Had to paid Bs 500 extra for each US$

Case Question 1. Why does a country like Venezuela impose capital controls? 2. In Case Question 1. Why does a country like Venezuela impose capital controls? 2. In the case of Venezuela, what is the difference between the gray market and the black market? 3. Create a financial analysis of Santiago’s choices and use it to recommend a solution to his problems.

Why does a country like Venezuela impose capital controls? • Preventing capital flight out Why does a country like Venezuela impose capital controls? • Preventing capital flight out of Venezuela – Depreciation of Bolivar – The come back of Chavez’s authority • Empowering Chavez’s economical authority – Limitation of foreign exchange – The Passage of the 2003 Exchange Regulation Decree – Devaluation of Venezuelan currency • Balance of payment manipulation

In the case of Venezuela, what is the difference between the gray market and In the case of Venezuela, what is the difference between the gray market and the black market? • Grey market CANTV shares mediation (Using ADRs in NYSE). For example in February 6 th, 2003 : – CANTV shares closed at Bs 7945/$ – CANTV ADRs closed in NYSE at US$ 18. 84/ADR – 1 ADR = 7 shares of local CANTV shares Implicit gray market rate = 7 x Bs 7945/share /($18. 84/ADR) = Bs 2952/$

In the case of Venezuela, what is the difference between the gray market and In the case of Venezuela, what is the difference between the gray market and the black market? (Continued…. ) • Black market – Using local stock broker or banker services who continuously held foreign currency off shores. – Exchange rate determined by negotiation (usually within 20% band of the gray market rate) – For example in February 6 th, 2004 : Exchange rate at black market was Bs 3300/US$ which were 10, 5% higher than the grey market.

Create a financial analysis of Santiago’s choices and use it to recommend a solution Create a financial analysis of Santiago’s choices and use it to recommend a solution to his problems • Santiago need $30. 000 to pay his supplier bills • CADIVI application was approved for $10. 000 at Bs 1920/US$ rate – Plus extra Bs 500/US$ to expedite his request – Final rate for Santiago was Bs 2420/US$ • Two option for $20. 000 shortage : – Grey market – Black market

Create a financial analysis of Santiago’s choices and use it to recommend a solution Create a financial analysis of Santiago’s choices and use it to recommend a solution to his problems • Grey market (Assumed at February 6 th, 2004 rate) Bs 2952/US$ x US$20. 000 = Bs 59. 040. 000 • Black market (Assumed at February 6 th, 2004 rate) Bs 3300/US$ x US$20. 000 = Bs 66. 000 • Santiago should pick grey market option that should save him : Bs 66. 000 -Bs 59. 040. 000 = Bs 6. 960. 000 • Another consideration is the time limit of bill payment