The National Center for Foreign Commerce (, CENCOEX), formerly the Commission for the Administration of Currency Exchange (Comisión de Administración de Divisas CADIVI), is the Venezuelan government body which administers legal currency exchange in Venezuela. The official buy/sell exchange rate was initially fixed at Bs.F. 4.28/Bs.F. 4.30CADIVI Convenio Cambiario 2, CADIVI per US dollar (USD).

History + Timeline of Foreign Exchange Regimes Period System Classification 1964–1983 Fixed exchange rate Free capital mobility 1983–1989 RECADI Exchange Control 1989–1992 Floating exchange rate Free capital mobility 1992–1994 Microdevaluations Free capital mobility 1994–1996 OTAC Exchange Control 1996–2002 Exchange Bands Exchange Control 2002–2003 Floating exchange rate Floating controlled 2003–present CADIVI and others Exchange Control

In 1983, a similar agency called "Differential Change Regime" (Régimen de Cambio Diferencial(RECADI)) was established to manage a system of differential exchange rates and capital controls,George D. E. Philip (2003), Democracy in Latin America: surviving conflict and crisis?, Wiley-Blackwell. p. 143 and disbanded in 1989 when the differential exchange rate system was abolished.Kevin J. Middlebrook (2000), Conservative parties, the right, and democracy in Latin America, Johns Hopkins University Press. p. 130 RECADI saw widespread corruption, and became a substantial scandal in 1989 when five former ministers were arrested, although the charges were later dropped.Damarys Canache, Michael R. Kulisheck (1998), Reinventing legitimacy: democracy and political change in Venezuela. Greenwood Publishing Group. p. 123

Exchange controls under CADIVI were adopted on 5 February 2003 in an attempt to limit capital flight.CADIVI, CADIVI, una medidia necesaria

In 2008, the Chávez government revalued the Venezuela currency by a ratio of 1:1000, thus creating a new currency known as the bolívar fuerte (Eng.: "bolivar") but kept the currency pegged to a higher rate against the dollar than the market value. Since 2003, this has created a scarcity of foreign currency, as confidence in the bolivar declined, and foreign exchange, especially the U.S. dollar, was in greater demand.

Functions

According to the Bank for International Settlements, "The Central Bank of Venezuela (BCV) fixed a monthly allocation of foreign currency to be administered by CADIVI, purchases foreign currency from residents, and sells foreign currency to the public and private sectors subject to approval from CADIVI."Bank for International Settlements (2005), "BIS Papers No 24: Foreign exchange market intervention in emerging markets: motives, techniques and implications", May 2005 Under Venezuelan law PDVSA must sell its foreign exchange to the Central Bank, thereby providing the bulk of foreign currency in Venezuela. The Venezuelan private sector requires more foreign exchange for imports than it generates for exports, and is dependent on the Bank to satisfy the difference.

A 2022 study in International Organization using firm-level data on CADIVI dollar allocations from 2003 to 2013 found that the Chávez government sold more than $200 billion in subsidized dollars, roughly 80 percent of them to importers, finding that the exchange-rate subsidy benefited importer lobbies at the expense of consumers.

Exchange rates The agency makes hard currency available to importers at several rates, with the best rate, CENCOEX, the official exchange rate 1 U.S. dollar for 6.3 bolivars, available to importers of food and medicine. A double rate, Complementary System of Foreign Exchange Administration (Sistema complementario de administracion de divisas (SICAD I)), twice the official exchange rate but still favorable, goes to importers of culturally important items such as Scotch, popular in Venezuela, and Barbie dolls, again, popular with certain demographics. A third rate, Alternative Foreign Exchange System (Sistema cambiario alternativo de divisas (SICAD II)), quite unfavorable at 50 times the official exchange rate, is offered to other importers. The black market rate, as of late December 2014, was 173 to 1 and rising rapidly. Publication of unofficial exchange rates within Venezuela is a crime; rates are published on external sites.

Fraud Fraud is widespread, with importers, regulators, and ordinary citizens stealing billions from the Venezuelan economy using one mechanism or another. Importers, for example, may simply sell the hard currency on the black market and not import anything, only part of what they declared, or at grossly exaggerated prices. A regulator may charge extra for exchange.

See also RECADI Corruption in Venezuela Foreign exchange controls

References

External links Sistema Complementario de Administración de Divisas (SICAD) Sistema Cambiario Alternativo de Divisas (SICAD II) Unofficial exchange rate website of DolarToday