Posts Tagged ‘The Troubled Currencies Project’

Troubled currencies: Argentina & Venezuela

Saturday, October 5th, 2013

Prof. Steve Hanke updates on his Troubled Currencies project,

Venezuela: While the crises in the Middle East are easing, the troubles in Venezuela are far from over. The black market exchange rate for the Venezuelan bolivar has fallen from 44.03 per U.S. dollar on September 24th to 40.92 on September 30th. This represents an appreciation of 7.6% over the last week. The implied annual inflation rate as of September 30th sits at 255%, down from a local high of 292% on September 17th. The ConocoPhillips dispute, a massive blackout, and worsening shortages caused by price controls have ravaged the Venezuelans’ confidence in the bolivar over the month of September.

Although the bolivar has rebounded modestly in recent weeks, this simply indicates that the economic outlook in Venezuela is only slightly less miserable than it was in mid-September. The economy is still on a slippery slope and economic expectations continue to be weighed down by the fragile political atmosphere, worsening shortages, and the ever-present specter of political violence. An inflation rate of 255% is nothing to celebrate.

Argentina: The black market exchange rate for the Argentine peso has held steady at around 9.5 per U.S. dollar since September 25th, with a 9.55 exchange rate on September 30th. That represents a 2.9% decrease in the value of the currency from the September 22nd rate of 9.27. The implied annual inflation rate as of September 30th sits at 54%, a decrease from the rate of 49% on September 22nd.

UPDATE: Linked by Babalu. Thank you!


Venezuela: Runaway inflation, runaway asylum

Wednesday, July 10th, 2013

The economy gets worse by the day:
Venezuelan Inflation Surges
Inflation in Venezuela reached a new milestone Tuesday: Prices measured on a yearly basis are now rising at the fastest rate since the late President Hugo Chávez took power in 1999.

The annual inflation rate in June registered at 39.6%, the highest 12-month figure since the central bank introduced a new methodology for its Consumer Price Index in 2008.

That’s the official rate; Johns Hopkins economics professor Steve Hanke has inaugurated The Troubled Currencies Project,

For various reasons — ranging from political mismanagement, to civil war, to economic sanctions — some countries are unable to maintain a stable domestic currency. These “troubled” currencies are associated with elevated rates of inflation, and in some extreme cases, hyperinflation. Often, it is difficult to obtain timely, reliable exchange-rate and inflation data for countries with troubled currencies.

To address this, the Troubled Currencies Project collects black-market exchange-rate data for these troubled currencies and estimates the implied inflation rates for each country. The data and estimates will be updated on a regular basis. A current snapshot is presented in the table below. A time series of these data can also be viewed in graphical form by clicking on the corresponding tab for each country at the bottom of this page.

As you can see at the Project table, Venezuela’s implied annual inflation rate tops 240%, and the value of the Bolivar has gone off the cliff. Additionally,

The central bank’s scarcity index, a measure of products missing from store shelves, eased in June, registering at 19.3%, after hitting record levels in recent months. The scarcity index soared to its highest levels in April at 21.3%, before declining to 20.5% in May.

Which brings us to the subject of runaway spy Edward Snowden, who clearly hasn’t been reading professor Hanke’s work. Just yesterday Glenn Greenwald reported that

Nicaragua and Bolivia have also said they would accept Snowden but Venezuela is better poised “to get him safely from Moscow to Latin America and to protect him once he’s there,” Greenwald told Reuters. “They’re a bigger country, a stronger country and a richer country with more leverage in international affairs.”

On their part,

The Venezuelan Embassy in Moscow said it had no information on whether the fugitive NSA leaker had completed a deal that would allow him to leave the transit area of an airport in the Russian capital.

I guess Putin hasn’t put the finishing touches on getting Snowden out of the country.