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Untitled Document
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Bolivia |
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The Central Bank (Banco Central) together with the Ministry of Finance managed monetary policy and regulated the nation's financial system. Established in 1928, the Central Bank controlled the money supply, restrained inflation, regulated credit, issued currency, and auctioned foreign exchange.
Bolivian Peso ($b) replaced the Boliviano on 1 January 1963, at a ratio of $b1=1000 Bolivianos. The peso was a stable currency until it was devalued in 1972 and remained at $b20=US$1 throughout the 1970s. As the economy deteriorated in the early 1980s, the fixed exchange rate regime was replaced by a controlled, fluctuating rate system and an Effective Rate for the Peso was established. In 1982, the Official Rate of $b20=US$1 was merged with the Effective Rate and devaluated to $b44=US1. In March, a dual exchange rate system and an Export Rate were established. The fixed Official Rate was applicable to wheat imports and public debt-servicing payments while all other transactions were to take place at a floating official free market rate. However, the dual exchange market system and Export Rate were abolished in November. On the other hand, Tourist Rate became effective in November, but was lifted in the following year. (Hudson)
In 1984, the unitary exchange rate system for Bolivian Peso was replaced by a system involving five exchange rates. Besides, a Travel Rate was established for the purchase of airline tickets and a Mining Rate for governing the liquidation of mine earnings. However, both rates were abolished in February 1985. Bolivia decided to float the Peso against the U.S. Dollar causing an immediate devaluation in August 1985. The Effective Rate was reinstated and the official selling rate was determined at auctions held daily by the Banco Central. The official exchange rate was the average of the bid rates accepted in the latest auction and applied to all foreign exchange operations in Bolivia. The Committee conducted the auctions for Exchange and Reserves in the Banco Central. Before each auction, the Committee decided on the amount of foreign exchange to be auctioned and a floor price below which the Banco Central would not accept any bids. This floor price was the official exchange rate and was based on the exchange rate of the dollar. Economic agents could buy and sell foreign exchange freely. All public sector institutions, including public enterprises, must purchase foreign exchange for imports of goods and services through the Banco Central auction market. Furthermore, the black market was legalized (Parallel Exchange Market existed) as the government expected to keep the national currency at market rates. In January 1987, the new Boliviano replaced the Peso as the official currency, at a ratio of Bs1=$b1 million. In July, a dual Export Rate was established based on a 5% rebate on surrender of foreign exchange receipts from traditional exports and 10% for nontraditional exports. (Hudson)
By 1988 the currency was relatively stable at B2.3=US$1, and the difference between the official rate and the black market, or parallel rate, did not exceed 1 percent. The floating of the Boliviano was administered by the Central Bank, whose Committee for Exchange and Reserves held a daily auction of foreign exchange. The new system removed all taxes and commissions on the purchase of foreign exchange. At the end of 1997, the exchange rate arrangement of Bolivia reclassified to a managed floating system, Boliviano was adjusted periodically in small amounts at a fixed, preannounced rate or in response to changes in selective quantitative indicators. (FX Arrangement)
Major sources of reference include:
1) World Currency Yearbook (WCY)
2) IMF Annual Report on Exchange Arrangement and Exchange Restriction (IMF)
3) Hudson, Rex A. and Dennis M. Hanratty. 1989. Bolivia: a Country Study
Bolivia: Monetary and Exchange Rate Policies). Federal Research Division Library of Congress. (Hudson)
4) Exchange Rate Arrangements of Respective Countries and Regions (FX Arrangement) |
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Date
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Changes
to the exchange rate regime
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Bolivian Peso/Boliviano per U.S. dollar
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| January 1959 | The Bolivianos had been stabilized at 11,885 Bolivianos per U.S. Dollar. (WCY 1984, p.105) | | | 1 January 1963 | The Bolivian Peso ($b) was created, to replace the Boliviano at a ratio of 1 Peso for 1000 Bolivianos. A basic Official Rate of $b11.875/11.885 per U.S. Dollar was thus created.
For foreign exchange dealings in the private sector, buying and selling rates were fixed at $b11.865/11.91 per U.S. Dollar. (WCY 1984, p.105) | | | 25 October 1969 | The selling rates for the private sector were adjusted to $b11.885 and $b12.112 per U.S. Dollar. (WCY 1984, p.105) | | | 15 August 1971 | Following the floating of the U.S. Dollar, the Peso maintained its link to the American unit, thus effecting devaluation. (WCY 1984, p.105) | | | 18 December 1971 | Continuous devaluation of U.S. Dollar, the gold content of the Peso was theoretically reduced 7.89%, paralleling the American unit's devaluation. Thereby, Bolivia retained the basic Official Rate of $b11.875 (buying) and 11.885 (selling) per U.S. Dollar. (WCY 1984, p.105) | | | 27 October 1972 | Bolivia decreed a 39.4% devaluation of the Peso in terms of gold. A new, unified Official Rate of $b20 per U.S. Dollar was established, with buying and selling rates of $b20 and $b20.02 for government transactions. For non-governmental dealings, buying and selling rates were set at $b20 and $b20.4 per U.S. Dollar. (WCY 1984, p.105) | | | 13 February 1973 | Following the U.S. Dollar devaluation, La Paz maintained the Official Rate without changes, thereby reducing the Peso's gold content by 10%. (WCY 1984, p.105) | | | 12 November 1973 | The Central Bank temporarily suspended purchases and sales of foreign exchange. (IMF 1980, p.71) | | | 30 November 1979 | The fixed exchange rate regime was replaced by a fluctuating rate system. The Central Bank resumed purchases and sales of foreign exchange and, in the operating quotation, the Peso was devaluated from $b20 to $b24.51 per US$1 buying, and from $b20.4 to $b25 per US$1 selling. (IMF 1980, p.71)
An Effective Rate for the Peso, applicable to virtually all transactions, was established. As the currency was placed a controlled, floating basis and the unit was downgraded to $b24.5 and $b25 per U.S. Dollar. (WCY 1984, p.105) | | | 31 December 1979 | | 25.000 | | 31 December 1980 | | 25.000 | | 31 December 1981 | | 25.000 | | 5 February 1982 | The fixed Official Rate of $b20 per U.S. Dollar was merged with the Effective Rate and devaluated to $b44 per U.S. Dollar, with the buying and selling rates set at $b43.13 and $b44 per U.S. Dollar for the new fixed Official Rate. (WCY 1984, p.105)
Dealings in the parallel foreign exchange market were declared illegal.
| | | 24 March 1982 | The Peso was devalued, as a dual exchange rate system was created, with the fixed Official Rate applicable to wheat imports and public debt-servicing payments. All other transactions were to take place at a new, freely floating official free market rate to be determined by supply and demand.
An Export Rate was created by requiring 60% of export proceeds to be surrendered at the Official Rate and the other 40% converted at the Effective Rate. (WCY 1984, p.105) | | | 5 November 1982 | The dual exchange market system and the Export Rate were abolished, and a unified exchange rate was introduced. The Peso was further devalued to $b200 per U.S. Dollar, with buying and selling rates of $b196 and $b200 per U.S. Dollar. All private sector loans as well as foreign currency deposits in Bolivian banks were converted into Pesos at a Conversion Rate of $b145.4 per U.S. Dollar. (WCY 1984, p.105)
A Tourist Rate of $b216 per U.S. Dollar resulted from an 8% premium on purchases of foreign exchange by banks currency dealers, hotels and travel bureaus. (WCY 1985, p.122) | | | 8 November 1982 | The unified exchange rate was taken in effect. (IMF 1983, p.108) | | | 21 November 1983 | The Official Rate of Peso was cut 60.8% to $b500 per U.S. Dollar, with buying and selling rates of $b500 and $b510.2 per U.S. Dollar.
The Tourist Rate was abolished. (WCY 1985, p.116) | | | 13 April 1984 | Bolivian's Peso was downgraded 75% to $b2,000 per U.S. Dollar, with buying and selling rates of $b2,000 and $b2,039 per U.S. Dollar. (WCY 1985, p.116) | | | 17 August 1984 | The unitary exchange rate system for Bolivian Peso was replaced by a system involving five exchange rates (a five-tier exchange market was established). The $b2,000 per U.S. Dollar rate applied only to essential imports and $b5,000 per U.S. Dollar governed nonessential imports and most other dealings.
A Third Party Rate was to be set periodically, and Mixed Rates existed for conversion of certain export receipts. (WCY 1985, p.116) | | | 20 November 1984 | A Travel Rate was established based on an adjustment factor of 2.2 over the Official Rate for the purchase of airline tickets, at a rate of $b11,550 per U.S. Dollar. (WCY 1985, p.116) | | | 23 November 1984 | There was a unification of rate system. A single Official Rate of $b8,571 (buying) and $b9,000 (selling) per U.S. Dollar replaced the five-tier exchange system.
The Travel Rate remained but the adjustment factor was modified to 1.7, resulting in a rate of $b15,000 per U.S. Dollar. (IMF 1985, p.106) | | | 5 December 1984 | As a result of an agreement between the Government and the Bolivian Confederation of Labor, a Mining Sector Rate of $b17,500 per U.S. Dollar governed the liquidation of mine earnings. (IMF 1985, p.106) | | | 11 February 1985 | The Official Rate was slashed 80.95% to $b45,000 (buying) and $b50,000 (selling) per U.S. Dollar. (WCY 1986/87, p.234)
The Travel Rate and Mining Rate were abolished. (WCY 1986/87, p.240) | | | 16 May 1985 | The Peso was devalued 32.83% to $b67,000 (buying) and $b75,000 (selling) per U.S. Dollar. (WCY 1986/87, p.234) | | | 29 August 1985 | The Official Rate was abolished. (WCY 1986/87, p.240)
The Effective Rate was reinstated based on Auction Market. The Peso was determined by means of an auction market initially held twice a week. A Committee conducts the auctions for Exchange and Reserves in the Central Bank. The first auction resulted in a rate of $b1,150,000 per U.S. Dollar, representing a devaluation of 94.17%. The 11.9% spread between the buying and selling rates was discontinued. (WCY 1986/87, p.234)
In additional, a parallel exchange market existed and a Parallel Rate at $b1,850,000 per U.S. Dollar was introduced. (WCY 1988/89, p.241) | | | November 1985 | The official exchange rate of Peso was determined by means of an auction market three times a week. (IMF 1986, p.131) | | | 31 December 1985 | The exchange rate determined in the auction market was $b1,692,000 per U.S. Dollar.
The Parallel Rate was $b1,850,000 per U.S. Dollar. (IMF 1986, p.130) | 1,692,000.000 | | January 1986 | The Peso was determined by means of an auction market five times a week, reestablishing a controlled, floating Effective Bolivian Peso Rate. (WCY 1986/87, p.234) | | | 31 December 1986 | The Effective Rate was $b1,923,000 per U.S. Dollar.
The Parallel Rate was $b2,130,000 per U.S. Dollar. (WCY 1988/89, p.244) | 1,923,000.000 | | 1 January 1987 | The new currency, the Boliviano (Bs), was replaced the Pesos at a ratio of $b1,000,000 to 1 Boliviano (Bs). (WCY 1988/89, p.241)
The new Boliviano set at Bs1.923 per U.S. Dollar, was to determine at a daily auction by the Central Bank and governed all transactions. Except for exporters, who must sell their proceeds to the Central Bank at the Effective Rate, foreign exchange could be bought and sold freely. (WCY 1990/93, p.239) | | | 10 July 1987 | The dual Export Rate of Bs2.18 and Bs2.28 per U.S. Dollar was established based on a 5% rebate on the surrender of foreign exchange receipts from traditional exports and 10% for nontraditional exports. (WCY 1988/89, p.241) | | | 31 December 1987 | The Parallel Rate was Bs2.22=US$1 (buying) and Bs2.26=US$1 (selling). (IMF 1988, p.111) | 2.210 | | 1988 | The 5% rebate on the surrender of foreign exchange receipts from traditional exports was abolished. (WCY 1988/89, p.241) | | | 30 December 1988 | The Parallel Rate was Bs2.52=US$1 (buying) and Bs2.48=US$1 (selling). (IMF 1989, p.56) | 2.470 | | 1 January 1989 | A commission of Bs0.01 per U.S. Dollar was applied to sales of foreign exchange by the Central Bank to the public. (WCY 1990/93, p.239) | | | 1 February 1989 | Sales of foreign exchange by the Central Bank to the public were subject to a commission of Bs0.01 per U.S. Dollar over its buying rate. (IMF 1990, p.58) | | | 29 December 1989 | The Parallel Rate was Bs2.97=US$1 (buying) and Bs3.03=US$1 (selling). (IMF 1988, p.111) | 2.980 | | 20 August 1990 | The 10% rebate for nontraditional exports was cut to 6%. (WCY 1990/93, p.239) | | | 31 December 1990 | The Parallel Rate was Bs3.39=US$1 (buying) and Bs3.42=US$1 (selling). (IMF 1991, p.55) | 3.400 | | 15 March 1991 | The 10% rebate for nontraditional exports was abolished. (WCY 1990/93, p.239) | | | 31 December 1991 | The Parallel Rate was Bs3.74=US$1 (buying) and Bs3.76=US$1 (selling). (IMF 1992, p.57) | 3.745 | | 31 December 1992 | The Parallel Rate was Bs4.09=US$1 (buying) and Bs4.11=US$1 (selling). (IMF 1993, p.66) | | | 31 December 1993 | The Parallel Rate was Bs4.47=US$1 (buying) and Bs4.49=US$1 (selling). (IMF 1994, p.65) | | | 31 December 1994 | The Parallel Rate was Bs4.69=US$1 (buying) and Bs4.71=US$1 (selling). (IMF 1995, p.62) | | | 31 December 1995 | The Parallel Rate was Bs4.93=US$1 (buying) and Bs4.95=US$1 (selling). (IMF 1996, p.61) | | | 31 December 1997 | The exchange rate arrangement of Bolivia was reclassified to "managed floating" from "independently floating". (IMF 1998, p.115) | | | 13 January 1999 | The commission on the sales of foreign exchange by the Central Bank of Bolivia (CBB) to the public was increased from Bs0.01 to Bs0.02 per U.S. Dollar. (IMF 1999, p.114) | |
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