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Jan. 8 (Bloomberg) -- Venezuela’s benchmark dollar bonds rose to the highest in more than two months on speculation the government may devalue the bolivar, said Russell Dallen, head trader at Caracas Capital Markets at BBO Financial Services.
The yield on Venezuela’s 9.25 percent bonds due in 2027 fell 12 basis points, or 0.12 percentage point, to 12.13 percent at 4:18 p.m. in New York. The price on the securities climbed 0.70 cent on the dollar to 79.20 cents, the highest since Oct. 29. The bolivar fell 1.6 percent in unregulated trading to 6.25 per dollar from 6.15 yesterday, traders said.
“We’ve been watching the markets go crazy because people are expecting a devaluation; all the bonds went up,” Dallen said in a telephone interview from Miami. “You can make a strong argument that there needs to be a devaluation and the market would react positively to that.”
Venezuelan Finance Minister Ali Rodriguez denied the speculation in a telephone interview today from Caracas.
A devaluation would help Venezuela narrow its fiscal deficit by generating more bolivars for each dollar of oil revenue the government receives. Venezuela, the biggest producer of crude in Latin America, has left the bolivar fixed at 2.15 per dollar since March 2005.
President Hugo Chavez is scheduled to speak today at a meeting with his ministers at 4:30 p.m. New York time, a spokesman at the presidential press office said.
Rodriguez has said that a devaluation would cause consumer prices to surge. Venezuela’s annual inflation rate was 26.9 percent in 2009, the highest rate among 78 economies tracked by Bloomberg.
Venezuelans buy dollars in the so-called parallel market when they can’t get government authorization to purchase the U.S. currency at the official exchange rate.
--Editors: Lester Pimentel, Laura Zelenko.
Jan. 8 (Bloomberg) -- Venezuela’s benchmark dollar bonds rose to the highest in more than two months on speculation the government may devalue the bolivar, said Russell Dallen, head trader at Caracas Capital Markets at BBO Financial Services.
The yield on Venezuela’s 9.25 percent bonds due in 2027 fell 12 basis points, or 0.12 percentage point, to 12.13 percent at 4:18 p.m. in New York. The price on the securities climbed 0.70 cent on the dollar to 79.20 cents, the highest since Oct. 29. The bolivar fell 1.6 percent in unregulated trading to 6.25 per dollar from 6.15 yesterday, traders said.
“We’ve been watching the markets go crazy because people are expecting a devaluation; all the bonds went up,” Dallen said in a telephone interview from Miami. “You can make a strong argument that there needs to be a devaluation and the market would react positively to that.”
Venezuelan Finance Minister Ali Rodriguez denied the speculation in a telephone interview today from Caracas.
A devaluation would help Venezuela narrow its fiscal deficit by generating more bolivars for each dollar of oil revenue the government receives. Venezuela, the biggest producer of crude in Latin America, has left the bolivar fixed at 2.15 per dollar since March 2005.
President Hugo Chavez is scheduled to speak today at a meeting with his ministers at 4:30 p.m. New York time, a spokesman at the presidential press office said.
Rodriguez has said that a devaluation would cause consumer prices to surge. Venezuela’s annual inflation rate was 26.9 percent in 2009, the highest rate among 78 economies tracked by Bloomberg.
Venezuelans buy dollars in the so-called parallel market when they can’t get government authorization to purchase the U.S. currency at the official exchange rate.
--Editors: Lester Pimentel, Laura Zelenko.
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