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Marketwatch reports (my emphasis):
Bloomberg says (my emphasis):
Minyanville seems to suggest this could be the start of something big (their emphasis):
In a fresh example of how the global credit crunch is hitting emerging markets, Venezuela's overnight lending rate climbed to as high as 90% Thursday after the central bank said it has suspended open market operations meant for pumping liquidity into the market.
The average overnight rate had been at an average of 22% on Wednesday. Venezuela's central bank said it has suspended open market operations, but added it would maintain credit assistance operations, according to a statement published on its Web site Wednesday.
"The squeeze in the Venezuelan money market is yet another example that the global credit crunch is becoming visible in emerging markets, especially in the most imbalanced economies and in countries with a weak financial architecture like Venezuela," said Lars Christensen, senior analyst at Denmark's Danske Bank.
"This story is not an isolated Venezuela story, but rather a developing trend," he said, adding that money markets in both developed and emerging markets aren't functioning well at the moment.
The average overnight rate had been at an average of 22% on Wednesday. Venezuela's central bank said it has suspended open market operations, but added it would maintain credit assistance operations, according to a statement published on its Web site Wednesday.
"The squeeze in the Venezuelan money market is yet another example that the global credit crunch is becoming visible in emerging markets, especially in the most imbalanced economies and in countries with a weak financial architecture like Venezuela," said Lars Christensen, senior analyst at Denmark's Danske Bank.
"This story is not an isolated Venezuela story, but rather a developing trend," he said, adding that money markets in both developed and emerging markets aren't functioning well at the moment.
Venezuela's interbank overnight rate soared to as high as 120 percent after the central bank said it would halt some of its lending operations to financial institutions.
The rate hovered at about 40 percent at midday New York time, traders said. That's up from an average daily rate of 8.7 percent since Aug. 1. Banco Central de Venezuela suspended repurchase agreements yesterday, three days after President Hugo Chavez prodded policy makers to stop acting as an ``oxygen tank'' for banks that were short of funds.
...
``What's impacting the market is the suddenness of the decision to shut down those particular operations,'' Octavio said. ``Some small banks got caught off guard.''
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The bolivar strengthened in black market trading today as some banks sold dollars to cobble together the bolivars they needed. The bolivar rose 3.3 percent to 4,720 bolivars per U.S. dollar in the parallel market, traders said.
``There's just no liquidity in the market right now,'' said Richard La Rosa, a trader at brokerage ActiValores Sociedad de Corretaje SA in Caracas.
Venezuela pegs the bolivar at an official exchange rate of 2,150 under restrictions imposed in February 2003.
The rate hovered at about 40 percent at midday New York time, traders said. That's up from an average daily rate of 8.7 percent since Aug. 1. Banco Central de Venezuela suspended repurchase agreements yesterday, three days after President Hugo Chavez prodded policy makers to stop acting as an ``oxygen tank'' for banks that were short of funds.
...
``What's impacting the market is the suddenness of the decision to shut down those particular operations,'' Octavio said. ``Some small banks got caught off guard.''
...
The bolivar strengthened in black market trading today as some banks sold dollars to cobble together the bolivars they needed. The bolivar rose 3.3 percent to 4,720 bolivars per U.S. dollar in the parallel market, traders said.
``There's just no liquidity in the market right now,'' said Richard La Rosa, a trader at brokerage ActiValores Sociedad de Corretaje SA in Caracas.
Venezuela pegs the bolivar at an official exchange rate of 2,150 under restrictions imposed in February 2003.
Does this matter? You betcha, Minyans--in a globalized machination tied together by $500 trillion in derivatives, it all matters. It's just a function of what matters when and how much.
- Does Venezuela "matter"?
- Did you think Russia "mattered" in 1998?
- Is it me or does it strike anyone else as strange that the mainstream media hasn't mentioned this development?
- Even as the gold and crude markets seem to be reacting to it?