Venezuela’s new foreign currency rules are causing headaches for companies inside the country, and outside.
CCTV America’s Martin Markovits reported this story from Caracas.
Massive Venezuela currency devaluation hurting businessesVenezuela's new foreign currency rules are causing headaches for companies inside the country, and outside.
Venezuela’s currency controls are causing problems for companies big and small. Businesses struggle to get their hands on dollars for imports and also turn profits.
With revenues effectively trapped in the country by the devaluation of the bolivar, many U.S. companies say their Venezuelan assets now amount to a loss after a year that already saw profits dwindle by a weakening bolivar.
Pepsi took a $126 million hit in 2014. Coca-Cola lost over $660 million. Ford Motors last month took the bold move of writing off its entire investment in Venezuela which was about $800 million.
The currency move is part of government efforts to counter falling oil prices, an inflation rate topping 60 percent and a shortage of goods.
“It is to be a completely free system which will include supply and demand for exchange rates. The market itself will set the rate,” said Venezuelan Fiance Minister Rodolfo Marco Torres.
Venezuelans can now buy dollars at trading houses but at cost beyond many Venezuelans’ means.
Business leaders say the new market amounts to a massive devaluation, bringing with it a more costs to businesses.