Venezuela currency decline ails local and international business

Global Business

Venezuela’s recent changes to its foreign currency system has caused big problems for companies both inside and outside of its borders. The result has been a massive devaluation of the bolivar and big losses for multinational corporations.
CCTV’s Martin Markovits filed this story from Caracas.

Venezuela currency decline ails local and international business

Venezuela currency decline ails local and international business

Venezuela’s recent changes to its foreign currency system has caused big problems for companies both inside and outside of its borders. The result has been a massive devaluation of the bolivar and big losses for multinational corporations. CCTV’s Martin Markovits filed this story from Caracas.

Venezuela’s currency controls have caused problems for companies big and small. Businesses struggle to get their hands on dollars for imports and turn profits.

Revenues are effectively trapped in the country by the devaluation of the bolivar and many US companies say their Venezuelan assets now amount to a loss.

Pepsi took a $126 million hit in 2014. Coca-Cola lost over $660 million. Ford Motors took the bold move of writing off its entire investment in Venezuela: $800 million in January.

The currency move was part of government efforts to counter falling oil prices, an inflation rate topping 60 percent, and a shortage of goods.

Venezuelans can now buy dollars at trading houses but at a cost beyond many Venezuelan’s means.

Business leaders say the new market amounts to a massive devaluation, bringing with it more costs to businesses.

“With the creation of this mechanism, businesses are going to be greatly affected in terms of their production costs in this process of devaluation,” Francisco Martinez, the vice president of Venezuela’s Chamber of Commerce said.


Ray Zucaro discusses Venezuela’s currency reform

Ray Zucaro discusses Venezuela's currency reform

Ray Zucaro discusses Venezuela's currency reform

CCTV America’s Phillip Yin interviewed Ray Zucaro, Managing Principal of SW Asset Management about Venezuela’s economy and currency reform.

CCTV America’s Phillip Yin interviewed Ray Zucaro, Managing Principal of SW Asset Management about Venezuela’s economy and currency reform.