Venezuela has been hit by a wave of economic problems, with the two most pressing issues being the high inflation and the scarcity of goods. Although they are mentioned separately, these two issues are actually interconnected. In this report we look at how Venezuela’s state-run foreign currency exchange bureau, the CADIVI, took measures to fight capital flight by imposing artificial currency rates in 2003, and how this currency bubble is linked to the high inflation and the scarcity of commodities.
