The Bolivar: With Chavez Death, Does this Currency Rebound?

With reports coming out of Venezuela that its president, Hugo Chavez, has died, not only is there some geopolitical instability in the government of Venezuela, but as Chavez has had his thumb on much of the Venezuelan economy, one big question that may be debated  could be in the financial sector. With Chavez instituting various devaluation policies of the Venezuelan currency, the bolivar, over the last decade, what might happen with the currency going forward, and how might some multinational firms be impacted as they deal with Venezuela and use the currency in transactions?

Bloomberg’s Latin America correspondent, Alix Steel, spoke nearly a month ago about the latest devaluation, where Chavez ordered that the bolivar be devalued another 32 percent – which marked the fifth devaluation order in nine years, which has resulted in the bolivar losing 90 percent of its overall value. Steel noted that this move was designed to improve oil exports for the country to help cut down on the government’s budget deficit, and she said part of these various devaluation moves are designed for the treasury to collect an “inflation tax” in the country.

With a devalued bolivar, Venezuela could actually make more money with its exports, Steel says, because it would take more bolivars to buy a barrel of oil from the country than it did before the devaluation. How low does the bolivar go? As of a month ago, it was taking eight bolivars for an American dollar, and the black market for the currency had an exchange rate of 20 bolivars to $1.

With the death of the man who directed all these devaluation policies, could the currency rebound? What could be the impact of this death on the economy in Venezuela and especially on the oil trade with the country? Let us know your thoughts in the comments section below.

DISCLOSURE: I currently own no positions in any oil-related stocks, nor do I own any foreign currency.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!