Bolivian Dollar Nears 10 Amid Rising Central Bank Rate

The Bolivian economy is once again grappling with a volatile exchange rate, as the parallel dollar continues its ascent, threatening to breach the 10 Boliviano mark. This situation underscores the persistent challenges facing the nation's currency, with the informal market dictating a higher rate than even the Central Bank's adjusted reference price. The gap between the official fixed rate and the parallel market, which has stood at Bs 6.96 since 2011, now exceeds 40%, highlighting a significant disconnect.

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the country is going through a "currency battle" between the public sector, the financial system, and the private market to capture the few available dollars.

Economists like Fernando Romero describe this as a "currency battle" for scarce dollars between public, financial, and private sectors. The outlook remains grim, with projections of a continued rise in both reference and parallel rates. This is attributed to deep-seated structural problems: a chronic shortage of foreign currency, robust demand for dollars, and a lack of fundamental economic reforms. The reference rate will likely see gradual adjustments, while the parallel market could experience more rapid and volatile increases.

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in the coming months, the most likely trend is that the dollar will continue to rise, both the reference and the parallel.

Further exacerbating the situation are social unrest, potential cost increases such as wages and fuel, and ongoing political and social uncertainty. These factors are expected to intensify the demand for dollars. Without significant shifts in economic policy or a substantial inflow of foreign currency, the exchange rate gap is likely to persist, maintaining a sustained upward trend in the short term. This ongoing economic instability is a primary concern for Bolivians, impacting daily life and business operations.

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This is because the structural problems have not been resolved: there is a shortage of foreign currency, high demand for dollars, and an absence of fundamental economic measures.