Bolivia Abandons Fixed Dollar Regime in Favor of Floating Exchange Rate

Bolivia has abandoned its fixed dollar exchange rate regime after 15 years, adopting a floating dollar system. The country's Economy Ministry recognized that the current regime had failed due to reduced oil exports since 2005, making it impossible to continue with the exchange regime.

The exchange rate was fixed in 2011 at nearly 7 Bolivian bolivianos per dollar. However, this led to severe dollar shortages, causing locals to expand stablecoin proxy markets. After the central bank ban on crypto-linked operations was lifted in June 2024, the ecosystem experienced exponential growth, leading to massive adoption and increasing trading volumes.

On June 26, the Ministry of Economy published Resolution 245, opening the Bolivian market to a system of free flotation on the dollar exchange rate. The new exchange rate opened at 9.73 Bolivian bolivianos per dollar, an implied devaluation of nearly 40%.

Economy Minister José Gabriel Espinoza stressed that this would benefit the country's economy, as the value of the dollar would no longer be governed by interventions from the Central Bank of Bolivia.