Drivers of Hyperinflation Still In Play In Venezuela, Despite Short-Term Improvement
- Fitch does not expect a stabilization of inflation or the bolĂvar Soberano (VES) until a new government is in power in Venezuela.
- However, the research agency revised down its forecast for inflation to average 143,106.5% y-o-y in 2019, and for the exchange rate to average VES16,197.6/USD, as the lifting of currency controls and implementation of higher reserve requirements has eased some upward pressures.
- Both inflation and the exchange rate would improve significantly in 2020 under the base case of a new government coming to power, though there is a substantial risk that the PSUV-led government will remain through that year.
(Source: Fitch)