By Darcy Crowe 
   Of DOW JONES NEWSWIRES 
 

CARACAS (Dow Jones)--Venezuela's parallel market for dollars is seeing unusually low trading volumes and little demand for greenbacks in the last few days, taming the normally volatile rate for U.S. currency.

"There's simply very little demand right now," said Asdrubal Oliveros, an economist with Caracas-based research firm Ecoanalitica.

Investors and companies in need of dollars are waiting for the government to issue local bonds exchangeable for dollars, which could help bring down the unofficial exchange rate. The market has been expecting the bond sales at least since early May, Oliveros said.

On Tuesday a dollar fetched around 6.4 bolivars, barely unchanged during the last two weeks, traders said. The figure is almost three times more than the official government exchange rate of VEB2.15 per dollar.

The bond issues could be geared to supply greenbacks to the parallel market and also to help the government finance the operations of the state oil company, Petroleos de Venezuela, or PdVSA.

There's growing speculation, however, that the government could avoid issuing bonds and instead finance the company by securing direct loans from countries such as Japan and Brazil, some traders said. President Hugo Chavez has ruled out a devaluation of the bolivar, and Finance Minister Ali Rodriguez has said that it is necessary to curb Venezuela's dependence on imports before adjusting the currency.

Venezuelans trying to obtain dollars in the country can apply to the Cadivi currency board to buy dollars at the official exchange rate. If that window shuts, they can turn to the parallel exchange market.

The government reduced the sale of dollars at the official rate in the first four months of the year to $7.15 billion, from $11 billion in the same period a year ago, to safeguard its dollar reserves amid a 50% decline in oil revenue, the country's main source of income.

Venezuela depends on oil revenue for 90% of its exports and 50% of government revenue.

To save U.S. currency, the government slashed by half, to $900 a month, the limit on remittances that Venezuelan residents can send to relatives abroad.

The reduction in dollar sales at the official rate is also forcing more companies to turn to the parallel market to secure dollars for their operations.

After short episodes where the government has tried to reduce the unofficial rate, the government seems to growing more comfortable with the notion that more companies will have to turn to the parallel market to buy U.S. currency.

There has also been speculation than the government could adopt a dual foreign exchange system in which companies that import goods that are deemed essential could secure a low rate, while other firms would have to pay more to buy U.S. currency.

Rodriguez dismissed this possibility last week and said that a so-called dual exchange rate system was not being considered by the government.

Some Venezuelan observers, however, point out that the government is implementing an implicit dual exchange-rate system.

The fact that the parallel market for dollars "is getting increasingly established and continues to grow under the benign neglect of the authorities is already implicit validation of a non-official dual exchange-rate regime in Venezuela," Goldman Sachs said in a report.

-By Darcy Crowe, Dow Jones Newswires; (58) 414 249 6821; darcy.crowe@dowjones.com

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