Bolivia ends 15-year dollar peg

Move aims to stabilise currency markets ahead of IMF funding talks

Bolivia will adopt a flexible exchange-rate system. the government said on Friday, effectively devaluing the currency by ending a 15-year dollar peg in a major policy shift aimed at restoring economic stability.

Bolivia's central bank will oversee the shift, as the government aims to "strengthen macroeconomic stability, preserve external competitiveness. contribute to the balance of payments equilibrium," the economy ministry said in a decree.

The move is part of Bolivia's broader effort to normalise currency markets. boost investor confidence as Bolivia negotiates a financing programme worth at least $2.5 billion with the International Monetary Fund (IMF) and grapples with severe scarcity of dollars.

Bolivia had kept its official exchange rate largely unchanged since 2011 at 6.86 bolivianos per dollar for purchases. 6.96 for sales. But falling foreign-exchange reserves. increasing dollar shortages fuelled the emergence of a parallel market, with the dollar at times trading near 20 bolivianos.

More recently, the government has been using a reference rate of around 9.90 bolivianos per dollar, which accounts for most commercial. financial transactions.

Shortly after the decree. the central bank updated its website to show the official exchange rate at 9.73 bolivianos per dollar as of Monday, implying a loss of about 30%.

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