Bolivia Central Bank Moves to Absorb US$250 Million After Diesel Price Rise
The Bolivia central bank will absorb Bs 3 billion (about US$250 million) by October and freed bank dollar prices after diesel rose 83% on 19 September. The post Bolivia Central Bank Moves to Absorb US$250 Million After Diesel Price Rise appeared first on The Rio Times .
Bolivia's central bank is absorbing US$250 million from the banking system to counter a sharp rise in diesel prices. The Banco Central de Bolivia (BCB) announced the move on September 25, implementing the Expanded Monetary Reserve in response to the 83% increase in diesel costs. The reserve will hold Bs 1.2 billion (US$100 million) in September and Bs 1.8 billion (US$150 million) in October.
The BCB also altered foreign-exchange rules on September 24, removing a cap on dollar prices and adopting a new method for calculating the official rate. The new rate uses a weighted median of prices banks pay to buy dollars, rather than the previous fixed rate plus a 0.10 boliviano premium. The diesel price hike, which took effect on September 19, has led to higher transport and food costs across the country.
The BCB aims for single-digit inflation in the short and medium term, emphasizing the need to control money supply and expectations. Despite the central bank's reserves, comprising mostly gold, its ability to absorb the additional funds remains a significant step in managing the economic impact of the diesel price surge.
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