Venezuela relents on currency controls

Venezuela repealed portions of laws governing foreign exchange, enabling businesses and individuals to swap money at designated trading houses and increasing access to hard currency after more than a decade of strict controls.

The changes passed by the politically omnipotent constituent assembly Thursday are to take effect Aug. 20, when the government is simultaneously planning to slash five zeroes off denominations of its near-worthless bolivar currency. Inflation that could reach 1 million percent this year and a deep depression has forced President Nicolas Maduro to begin dismantling a Byzantine system that has left citizens desperate for food and medicine.

“I don’t think it will significantly change the Venezuelan economy,” said Francisco Ibarra, director at Econometrica. The government “isn’t fully convinced of releasing foreign exchange controls.”

The government did not say at what rates it would offer to sell currencies at trading houses. In April, Maduro awarded 16 exchange licenses to allow trades between the bolivar and cryptocurrencies.

The late President Hugo Chavez began limiting money-changing in 2003, but in the years that followed, the exchange regime engendered widespread corruption and starved local industries of hard currency needed for imports.