Venezuela Minister Defends Selling Argentine Debt To Banks
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CARACAS (Dow Jones)--Venezuela's sales of Argentine debt to local banks isn't a crooked system and the government will carry on with it in the future, Venezuela's finance minister said Tuesday.
"People say I sell bonds to my friends, but that's ridiculous," Minister Nelson Merentes told reporters during a press briefing.
The minister also dismissed reports that banks are making considerable amounts of money reselling Argentine paper to clients.
President Hugo Chavez has devoted roughly $3.1 billion to purchase Argentine Boden 12 and Boden 15 debt instruments and has sold off $2.4 billion of dollar-denominated Boden 12 debt to local banks.
Buying and selling the paper to financial institutions has netted the government $201 million in gains, according to finance ministry data.
Banks typically sell these bonds in the international markets in exchange for scarce dollars. Chavez' capital controls, imposed in early 2003 to prevent capital flight, spawned an active black market for U.S. currency in the Andean country. But the restrictions don't apply to stock and bond transactions.
Venezuelan officials usually sell dollar-denominated debt to investors in exchange for bolivars to influence the price of the dollar in the parallel market.
Lately, the government has resorted to selling Argentine debt locally to continue influencing the unofficial dollar rate.
The government has set a VEB2,150-per-dollar rate but a dollar can fetch as much VEB2,600 in the black market.
Merentes said the government sells Argentine debt to banks at an exchange rate that can vary from VEB2,380 and VEB2,400 per dollar.
Critics claim selling that these bonds to banks effectively provides financial institutions and their large clients a "second black market" for the dollar that most people can't access.
The minister insisted the government sells debt to as many as 33 banks and will continue buying Argentine paper in the future.
"We have the political will to continue," working with Argentina, he said. "But we cannot and should not anticipate how much more we will buy."
-By Raul Gallegos, Dow Jones Newswires; 58-212-564-1339; raul.gallegos@dowjones.com
(END) Dow Jones Newswires
July 11, 2006 17:20 ET (21:20 GMT) |
