Bolivian Central Bank Sells Dollars Directly to Citizens as Devaluation Fears Rise Cryptocurrencies and ICOs

The Central Bank of Bolivia is selling dollars directly to citizens to stop what it calls a speculative attack that has increased the demand for foreign currency by the population. This increase in demand has been caused by several factors that led the population to believe that there could be a devaluation movement that was coming.

Central Bank of Bolivia sells dollars to appease local market

The Central Bank of Bolivia executes extraordinary measures to supply its internal market with foreign currency. On March 6, the monetary institution Announced that it would begin to sell dollars directly to citizens, adding its action to the traditional established exchange market.

The move would counter what the central bank calls a “speculative attack” on the national monetary system, prompting Bolivians to buy more dollars to ward off rumored exchange rate hikes. Edwin Rojas, president of the Central Bank of Bolivia, stated:

The Central Bank of Bolivia opens its doors, we reiterate, through Banco Unión, since it is the organization that is going to collaborate with us in this process so that the population that demands dollars and cannot get them (outside) comes to us to satisfy your demand.

Fears of devaluation

The increased demand for dollars facing the central bank has to do with fears about the current state of national reserves and how this may trigger a change in the US dollar exchange rate.

In Bolivia there is a fixed exchange rate, set in 2011, which establishes that each dollar has a value of 6.86 bolivianos, the country’s fiat currency. Countries like Venezuela and Argentina, which had established currency exchange controls, have experienced high levels of devaluation and inflation due to these restrictions.

On March 9, Rojas gave a summary of how the market was reacting to this measure, noting that during the last two weeks more than $91 million was allocated to satisfy the unprecedented demand. He explained that the country had no plans to change its monetary policy.

However, analysts are not sure about the sustainability of these moves. The last report on the state of foreign exchange reserves dates from February 8, when the central bank reported having $372 million. This is less than the $400 million that Antonio Saravia, local economist, estimates that the national market needs monthly. He doubts the government can sustain this level of intervention for long.

What do you think of the situation facing the Central Bank of Bolivia with an unprecedented demand for US dollars? Tell us in the comment section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as someone who was late to the game, entering the cryptosphere when the price spike occurred in December 2017. With a background in computer engineering, living in Venezuela and being impacted by the rise of cryptocurrencies on a societal level, offers a different point of view. about the success of cryptocurrencies and how he helps the unbanked and underserved.

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