World
Institutional
links
Welcome back on
26 -29 August,
ONS 2008
ONS 2008:
Press sees Norway
from toe to tip
Petroleumworld
Business
Partners:
Centre for
Global Energy
Studies
Blogspots
The Energy Guide
to Venezuela
By Venezuelan British
Chamber of Commer
  |
Devaluation: Some hints for friends and colleagues
----- Original Message -----
From: Oliver L. Campbell
To: Elio Ohep
Sent: Thursday, February 12, 2009 6:57 AM
Subject: Letter to The editor, Petroleumworld / Possible devaluation
Devaluation: Some hints for friends and colleagues
Whether the government will devalue the bolivar after the 15 February referendum is anybody's guess. However, I would remind your readers that the classical approach to devaluing a currency is to deny it will happen right up to the moment when it is decreed. Finance Ministers all over the world lie to their citizens and deny devaluation is imminent when they have already made up their minds it will take place. However, we should not blame them because they lie with the best intentions. If those with large amounts of money, like currency traders and large companies, know with certainty a devaluation is about to occur, then they can profit from it at the government's expense. I take the bolivar as an example only since some pundits say devaluation is a good possibility.
• Sell all the bolivars you have for US dollars even if this means buying them in the parallel market. They will be worth more after devaluation in bolivar terms.
• Take out loans and incur as much debt in bolivars as you can and use the money to buy US dollars in the parallel market. After devaluation, you will then need less US dollars to pay off the bolivar debt.
• Similarly, delay paying off bolivar creditors as much as you can and use the cash held back to purchase US dollars. After devaluation, use the US dollars to pay off the creditors and make a profit.
• On the other hand, collect your bolivar receivables as quickly as possible so you can use any profit element to buy US dollars before devaluation takes place.
• If you have US dollars in the USA which you will have to sell to the Central Bank, delay doing so until after the devaluation takes place and they are worth more in bolivar terms.
The main thing when you anticipate devaluation of a local currency is to make sure you hold as little of it as you can by converting it into a hard currency, and also go into debt in the local currency for the same purpose. Conversely, hold on to the hard currency for as long as you can before converting it to the local currency.
This is all very well known by bankers and businessmen and I make no apologies for ensuring my friends and colleagues, with less financial knowledge, are also aware of it.
Oliver L Campbell
12.02.09
Petroleumworld 02/13/09
Copyright©1999 - 2009 respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.
Your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.Write to editor@petroleumworld.com
Any question or suggestions, please write to:
editor@petroleumworld.com
Best Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels