Gold plunge to hit Venezuela hard
Venezuela is one such country as the strategy carried out by the authorities at the Central Bank of Venezuelan has turned it into a country highly vulnerable to the dramatic fall of gold prices.
Since 2013, fluctuating gold prices have puzzled gold traders as the yellow metal tumbled by over 25 percent .
Some country's having enough gold reserves but without enough other liquid reserves to satisfy the needs of their economies for imports also suffered.
Venezuela is one such country as the strategy carried out by the authorities at the Central Bank of Venezuelan has turned it into a country highly vulnerable to the dramatic fall of gold prices.
Analysts said Venezuelan reserves are not in at an adequate level. They can hardly be enough to cover imports for one month. In June, 70% of the country's international reserves were comprised by 365.8 tons of gold.
In this scenario, Venezuela has the largest gold reserves among Latin American countries and ranks fifth worldwide.
This does not mean the country will not be able to import any longer; small portions of money continue coming in. However, there is no flexibility to meet the requirements of the private sector, which needs US dollars to import and curb shortage.
The reduction in the portion of petrodollars allocated to the Central Bank has resulted in fewer reserves. Paradoxically, the nation stopped accumulating reserves and became more fragile due to the jump of its debts in foreign currency, higher dependence on imports, heavy capital outflow, and country risk levels that hit credits in international markets.
Sumber: Google
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