Bolivia has ended one of Latin America's longest-running fixed exchange rate regimes, formalising a transition to a flexible currency system that will see the boliviano's value determined by daily market supply and demand. 

Economy Minister José Gabriel Espinoza signed Ministerial Resolution 245 on June 26, instructing the Banco Central de Bolivia (BCB) to implement the shift starting June 29, when the official exchange rate will be set at BOB9.73 per dollar — replacing the BOB6.96 peg that had been in place since late 2011. Under the new mechanism, the BCB will calculate a daily reference rate based on buy-and-sell operations registered by financial institutions during each business day, with the resulting rate applying to public sector transactions and other operations the following day.

The abandonment of the fixed rate effectively acknowledges what the parallel market had been signalling for years. The unofficial dollar rate had already been trading between BOB9.50 and BOB10 in recent weeks, and reached as high as BOB20 in May 2025 at the peak of the country's dollar scarcity crisis. Net international reserves, which peaked at $15.12bn in 2014, had fallen to $3.15bn as gas export revenues to Brazil and Argentina contracted sharply and state oil firm YPFB's hydrocarbon income dried up. The resolution itself acknowledges that the foreign exchange buffer built during the commodity boom was "significantly reduced," making it necessary to incentivise other export sectors.

The government had been laying the groundwork for months. In December, the BCB began publishing a daily reference rate for the boliviano, signalling the direction of travel. In January, it began returning dollar savings to individuals and small businesses with deposits of up to $1,000, with the measure expected to extend to other savers from July. In April, overseas card purchases were permitted at the reference rate rather than the official peg — a further step towards market alignment.

The decision carries significant economic implications across multiple sectors. According to La Patria, economist Fernando Romero warned of initial volatility and a likely further depreciation of the boliviano as the new regime beds in, noting that the rate's success will depend on the recovery of export earnings, fiscal discipline and the restoration of market confidence. Import costs — including medicines, machinery, technology, spare parts and vehicles — are expected to rise, adding to inflationary pressures in an economy where annual inflation already exceeded 20% in 2025.

For exporters, however, a more competitive exchange rate would increase boliviano revenues per dollar earned, potentially incentivising diversification beyond hydrocarbons. Borrowers with boliviano-denominated loans face no immediate change, though future interest rates may be influenced by the inflationary dynamics the new regime introduces.

Broader structural consequences are also expected in the savings market. Analysts quoted by La Patria said the reform could encourage greater diversification between boliviano and dollar-denominated savings, though persistent economic uncertainty may keep many Bolivians gravitating towards the dollar as a store of value.

The reform drew immediate and sharp criticism from former president Evo Morales, who dismissed it as a "disguised devaluation" rather than a currency unification. "This is not a unification of the exchange rate. We are witnessing a new covert devaluation by a government that has renounced defending the people's economy," Morales wrote on X. He warned that under the new system "it will no longer be the state that defends the value of our currency, but speculators who will set the price of the dollar," and predicted ordinary Bolivians and pension fund savers would bear the costs. Morales remains in the Trópico de Cochabamba, shielded from an arrest warrant on aggravated human trafficking charges linked to an alleged relationship with a minor during his presidency, an accusation he denies.

The Vice-Presidency also weighed in with a more measured but cautionary statement, noting that a flexible exchange rate regime "is neither good nor bad in itself" but depends on the conditions in which it is introduced. The communiqué, issued under Vice-President Edmand Lara — who has positioned himself as a "constructive opponent" of the Paz centrist administration — warned that Bolivia currently faces "weakened reserves," "structural dollar scarcity" and "lagging revenues," factors that could amplify the reform's negative effects. Without fiscal discipline, genuine dollar inflows and a restoration of confidence, it said, "a flexible exchange rate stops being a stabiliser and becomes an accelerator of inflation and uncertainty."

The reform arrives as Bolivia attempts to stabilise after the most severe social crisis in decades, which saw seven weeks of road blockades fuelled by Morales and his supporters, ending only after President Rodrigo Paz declared a state of emergency on June 20. The economy, already suffering its worst performance in four decades, now faces the additional adjustment of a currency regime change that economists see as unavoidable but potentially painful. Whether the flexibility delivers the macroeconomic rebalancing the cash-strapped government sorely needs, or deepens the inflationary spiral already under way, will depend on highly uncertain factors such as export recovery, fiscal credibility and investor confidence,