VENEZUELA: Foreign exchange loosening averts August Ford plant shut-down - report
Ford's Venezuelan subsidiary won't halt production for a week in August as it once feared a foreign exchange shortage might force it to, company spokesman Ricardo Tinoco told Dow Jones on Tuesday.
"We are a little less worried about the situation now," Tinoco told Dow Jones Newswires in a telephone interview.
Tinoco told the news agency the government's foreign exchange disbursements have been speedy enough to avoid the production halt but couldn't immediately say how much currency Ford had received to pay its suppliers with.
Dow Jones said Ford's normal monthly imports total between $US7 million and $10 million for its 1,500-units-a-month production facility that supplies its Venezuela market and exports to Ecuador and Colombia.
The exports usually bring between $70 million and $80 million a year in foreign exchange into Venezuela, Dow Jones said, adding that the foreign exchange shortage caused Ford to halt production between June 2 and June 6 due to a lack of imported supplies.
Dow Jones noted that the government halted foreign exchange purchases to protect reserves severely affected by central bank efforts to halt a slide in the bolivar as Venezuelans moved their savings overseas and, by then, the currency had lost about 70% against the dollar since the beginning of 2002.
Many businesses dependent on foreign exchange - Venezuela imports about 60% of consumption - have had to either close their doors or restock with dollars bought on the black market for up to 70% more than the official fixed rate, Dow Jones said, noting that the foreign exchange shortage has also contributed to lower vehicle sales.
Dow Jones said unit sales in Venezuela for all vehicle manufacturers were down about 66% year-on-year in the first half of this year, which included an ongoing two-month general strike that began on December 2. That followed a 41% on-year drop in total unit sales to about 128,000 units last year as the economy shrank 8.9%, the report added.
Gross domestic product is seen shrinking about 10% this year, amid 20% unemployment and 35% inflation, Dow Jones added.