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The recent appreciation of the Bolivian parallel dollar to more than 9 Bs has created an atmosphere of uncertainty. Informal business, one of the pillars of the Bolivian economy, has been hit, with prices of basic products such as flour, milk powder, beverages and tobacco fluctuating dramatically from day to day.
The Bolivian central bank insists that the official exchange rate remains stable at 6.86 and 6.96 Bolivian reales. However, the reality on the street is different: the parallel dollar is quoted between Bs 9.20 and Bs 10, the latter being the value used by informal traders to buy goods.
This difference between the official and parallel exchange rates leads to market distortions, discourages formal investment and encourages informal investment. For their part, consumers are forced to face increasing prices, directly affecting their household finances.
The authorities urgently need to take concrete measures to address the problem. A comprehensive plan is needed to tackle the root causes of the problem, combat smuggling, strengthen the financial system and boost confidence in the Bolivian economy. Dialogue between the government, the private sector and civil society is essential to find joint solutions.
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