Rising dollar may stymie Venezuela's efforts to combat inflation

CARACAS, Aug 25 (Reuters) – Efforts by the administration of Venezuelan President Nicolas Maduro to tamp down inflation by increasing supplies of foreign currency may be at risk amid economic growth after years of stagnation, analysts said.

Maduro’s government has succeeded in lowering consumer price growth, which was 137% year-on-year through July, by increasing the supply of foreign cash in local banks, limiting the expansion of credit, reducing public spending and increasing taxes.

But in recent weeks the central bank has sold fewer dollars and the government has increased spending, raising demand and sending the official dollar exchange rate soaring by 21.7% in six days.

“It’s impossible to think of exchange stability with the level of prices in Venezuela,” said economist Luis Arturo Barcenas. “The balance between the official rate and the non-official one was very…