Skip to comments.Venezuela Devalues Bolivar 17% To 50%
Posted on 01/09/2010 9:32:33 PM PST by bruinbirdman
Two-tier exchange rate reintroduced to limit imports and help domestic businesses.
President Hugo Chavez has devalued Venezuela's currency by at least 17%.
The bolivar will now have two levels--a preferential rate of 2.6 bolivars per U.S. dollar for priority imports like food, health and machinery and a 4.3 "petrodollar" rate for other goods.
The currency had been fixed at 2.15 to the dollar since 2005, but ahead of Friday's announcement was trading at 6 bolivars to the U.S. dollar in parallel trade, a tolerated black market.
The petrodollar rate represents a 50% devaluation of the official rate.
The move will boost the state's bolivar revenues from oil and help local exporters, which have been calling for an adjustment of the overvalued exchange rate, but add pressure on domestic prices, which rose 25% in 2009, the highest inflation rate in the Americas and one of the highest in the world. Finance Minister Ali Rodriguez said devaluation may add 3% to 5% to the annual inflation rate in 2010.
The economy contracted by 2.9% in 2009 following five consecutive years of growth, with recession starting in the third quarter. Manufacturing and commerce are two sectors hardest hit, with contractions in output of 7.2% and 8.2% respectively, according to the Central Bank. The oil sector was down 6.1% by volume.
Non-oil exports fell to $3.3 billion from $6 billion in 2008. Oil exports, which account for the overwhelming majority of Venezuela's foreign trade, fell to $60.9 billion from $95.1 billion over the same period, the sharpest drop in commodity exports of any Latin American nation.
Chavez, in a live address on state TV, said that the two official rates would have the effect of "limiting imports that are not strictly necessary and stimulating export policy."
By reintroducing a dual exchange rate last seen
(Excerpt) Read more at forbes.com ...
Wow, he’s going down fast! at this rate, he’ll be gone in 2 years.
The Obammunist's socialism = "Those other guys didn't do it right."
I don’t think so, unless he is assassinated. He now has in place the kind of totalitarian grip on Venezuela that the Castros have on Cuba.
The US does its dirty deeds more gradually.
Is that what those hijacker/terrorists who hijacked that TWA flight back in the 80’s meant by having “EAT THE RICH” silk-screen on their t-shirts???
(squeal of horror at that graphic!!)
Is there a way to download this graphic?
anyone know whats the effect on their economy with a two tier system? Anyone know? Noone will be that dumb to accept trade in the lower tier. Ppl will try to figure out how to trade in the higher tier thru the blackmarket
It is confusing to me, as well. How would they make that happen? I assume this would require price controls on those commodities, as well.
That's so true.
& from http://www.freerepublic.com/%5Ehttp://market-ticker.org/archives/1830-401kIRA-Screw-Job-Coming.html
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
Let me tell you what this is - it is an attempt to prevent the collapse of the Treasury market!
Forcing people into Treasuries as an "annuity" is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!
My Mac saves it... as 48 separate pictures.
well...going down to Altamira and finding a choice Castillian beauty to bring back home to mama just got cheaper.
Thanks Hugo..you prick.
bump for later!
Oh yeah, that'll work for sure! LOL!
Whew....to be 25 and visiting Venezuela and Columbia today!