On Thursday, the bolivar averaged 170 to the dollar on the new system where government officials say companies and individuals can trade freely, the central bank said, compared with 52 per dollar at which it traded on the previous alternative market.

The government sells dollars for priority imports at 6.3 bolivars and 12 bolivars, while the greenback trades at 190 bolivars on the black market.

The new market is the government’s fifth attempt in 12 years to meet demand for dollars and squash illegal trading fueled by currency controls. This year’s decline in oil revenue has exacerbated the drop in the bolivar, which has lost 90 percent of its value against the dollar on the black market since Maduro came to office two years ago.

“I was surprised to see a rate that almost matches the free floating level on the black market,” said Henkel Garcia, director of Caracas-based consulting company Econometrica. “A measure like this that moves the country closer to a currency equilibrium should be seen positively by the markets.”

Venezuela’s dollar bonds due in 2027 rose 1.04 cent on the dollar to 42.04 cents at 9:14 a.m. New York time. The bonds had reached a low of about 35 cents last month.

Sending a Signal

The new system, known as Simadi, allows banks and brokerages to trade cash and swap bonds at a rate agreed among themselves on a state-operated exchange. Exchange houses serving retail customers will be allowed to begin operations as soon as Feb. 19.

“By opening the system at a level close to the parallel, the government is probably trying to send a signal that it is a market mechanism,” Eurasia group analyst Risa Grais-Targow said Friday in a note to clients. “The key to the success of the market will therefore be private participation, which will depend on the mechanism being truly flexible and operating smoothly.”

Abandoning the price pegs that hindered the previous alternative market “is a very big step forward for this government,” Asdrubal Oliveros, director of Caracas-based consulting firm Ecoanalitica, said by telephone. “If the new platform overcomes operational obstacles, I think the black market rate will fall significantly and trading will become marginal.”

Bond Reaction

Venezuela’s dollar bonds fell the most in a month on Tuesday after central bank President Nelson Merentes said the government will continue supplying most dollars to the economy at the two stronger rates seen as unsustainable by many economists. Maduro said Tuesday that the new market will only account for 3 percent to 5 percent of all dollar sales in the country.

The success of the new market will depend on whether the government cuts back spending and reduces money printing to adjust to the weaker exchange rate, said Efrain Velazquez, president of the National Economic Committee.

Venezuela’s public sector budget deficit reached 19 percent of gross domestic product last year, according to a joint statement by 60 national economists including Oliveros published Jan. 23.

“Ensuring a sustainable source of funding for the foreign exchange system depends on re-designing the fiscal and monetary policies,” Velazquez said by telephone from Caracas.

Repatriating Profits

The new market gives foreign companies operating in Venezuela a legal way to repatriate earnings at a major discount, said Velazquez.

Venezuela owes about $23 billion in unpaid dividends and bills to companies ranging from oil drillers to airlines, according to Ecoanalitica.

“The rate is set by the market itself,” Merentes said in an interview on the Venevision Network on Wednesday. “A whole conglomerate of actors can sell” in the new market.

Ford Motor Co. and Kimberly-Clark Corp. are among the companies that took fourth-quarter charges because of difficulties exchanging bolivars for dollars. Ford said it will take a one-time pretax charge of $800 million that will reduce its fourth-quarter net income by about $700 million. Dallas-based Kimberly-Clark said it would take a $462 million charge to revalue its bolivars.

The Simadi rate “will become an important reference price for companies in Venezuela and the entire pricing structure will have to move toward it,” Velazquez said.