Effect of Global Remittance on the Economy

Running head: EFFECT OF GLOBAL REMITTANCE ON THE ECONOMY
Effect of Global Remittance on the Economy
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EFFECT OF GLOBAL REMITTANCE ON THE ECONOMY1
Executive summary
The aim of the report is to analyse the effect of currency devaluation on the economy of a
country. The economic crisis of Venezuela has been considered for analysis in the report. The
report explains the effects of currency devaluation on the economic situation Venezuela.
Further the report contains the positive and negative effects of the currency devaluation and it
concludes with the recommendation that how to use the advantages of currency devaluation
to fight against an economic crisis.

EFFECT OF GLOBAL REMITTANCE ON THE ECONOMY2
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Conclusion................................................................................................................................11
Recommendations....................................................................................................................11
Reference..................................................................................................................................13
Appendix..................................................................................................................................16

EFFECT OF GLOBAL REMITTANCE ON THE ECONOMY3
Introduction
The unrest in the economy of the Bolivarian republic of Venezuela has put a negative
effect in the global economy. Inflation is not new in the economy of Venezuela ass the
economy of the country solely depend on the price of oil, which is the main source of revenue
for the country. Therefore, due to the collapse in the oil price affected the economy of the
country and the rate of inflation increased rapidly and become major problem for the
government.
In such a circumstance, the government take decision of imposing restriction on the
capital flight, which reduces the rate of inflation by 25%.Capital flight in economies, occurs
when the liquid assets rapidly drained out of the economy due to an economic crisis. This
leads to a sharp fall in the exchange rate of the country that is affected by the economic crisis.
The financial crisis also affects the currency of the Venezuela for which the country
formed an official body known as the CADVI which grants the citizen of the country foreign
currency at a discount. The effect of financial crisis forced a government of the country to
make changes in the overall structure of the financial policy.
Discussion
The effect of the financial crisis in the currency of Venezuela
Th government of Venezuela artificially controls the currency to control the inflation
rate of the country. The government used the foreign reserve to purchase its own currency to
stabilize the bolivar and to do that the country manipulated the value of the currency to its
citizens.
The country by inflating the currency has faced several problems that results in to the
fall of the value of the currency of Venezuela and the citizens of the country has to buy