Bolivia’s Currency Crisis Deepens as Dollar Become Hard to Find

Sergio Mendoza, Bloomberg News

Police officers stand guard as residents wait in line outside of the Bolivian Central Bank in La Paz, Bolivia, on Wednesday, March 8, 2023. Bolivians formed a line three blocks long outside the central banks headquarters in La Paz on Wednesday as locals rush to convert their savings into dollars amid a growing sense of unease in the Andean nation. , Bloomberg

(Bloomberg) -- Bolivia’s foreign currency crisis is deepening as the supply of dollars at commercial banks and on the black market dries up, leaving the central bank as the last place people can buy the greenbacks in La Paz.

Lines outside the central bank stretched for two blocks on Tuesday. Residents have queued for the last two weeks to buy dollars in the city, home to the government and congress. Black-market traders, meanwhile, stepped back after one person was arrested Monday for offering dollars at an exchange rate of 7.4 bolivianos, above the official rate of about 6.9 to the dollar.

Fitch Ratings downgraded Bolivia deeper into junk last week as foreign currency reserves evaporated. As of Feb. 8, the central bank had about $3.5 billion in reserves, but only $372 million of that in cash. Since then, the bank has stopped issuing its weekly bulletin on holdings and it is not clear how much is left.

A $22.5 million coupon payment on the nation’s dollar bonds maturing in 2028 came due on Monday, according to data compiled by Bloomberg. The government did not respond to questions about whether it made the payment. The notes trade around 58.6 cents on the dollar.

Finance Minister Marcelo Montenegro said over the weekend that Bolivia has a “liquidity, and not a solvency problem.” That issue would be resolved when congress votes on new multilateral credits and the bill enabling the central bank to sell its gold reserves. However, it’s not clear the government has sufficient support to get the bill approved by lawmakers.