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| Caribbean-Latin America |
| U.S. freezes Venezuelan 'parallel market' account |
| 2009-03-27 |
| Venezuela's foreign exchange market was thrown into turmoil Thursday after the U.S. Drug Enforcement Administration obtained a court order freezing a Bank of America account handling a large percentage of ''parallel market'' business. The parallel market emerged in 2003 after the government of President Hugo Chávez imposed exchange controls, banning the free trading of foreign currency. It consists of an indirect exchange mechanism involving the buying and selling of bonds that can be traded in either dollars or Venezuelan bolÃvars. With the cash-strapped government strictly rationing dollars at the official rate of 2.15 bolÃvars to the dollar, the parallel market has had to take up the slack, and political and economic uncertainty had helped push the rate in recent days to around 6.0 bolÃvars. Late Wednesday, funds in an ''umbrella'' account belonging to Miami-based Rosemont Finance Corporation were frozen, after a grand jury in Massachusetts indicted its principal, Rama Vyasulu, on charges of money laundering and a warrant for his arrest was issued. According to specialist financial websites in Venezuela and the Reuters news agency, the account consisted of a large number of sub-accounts belonging to around 50 foreign exchange brokers -- 65 percent of those operating in the parallel market. After the parallel exchange rate shot up to 7 bolÃvars to the dollar Thursday morning, the market closed down because of the uncertainty of the situation. Criticism of the corruption associated with the government's handling of the exchange market has grown, particularly after it was reported that the state oil corporation, Petróleos de Venezuela, was illegally selling dollars on the parallel market. |
| Posted by:tipper |