Venezuela Announces Currency Devaluation

Article excerpt

CARACAS, Venezuela Venezuela's government announced Friday it is devaluing the country's currency, a long-anticipated change expected to push up prices in the heavily import-reliant economy.

Officials said the fixed exchange rate is changing from 4.30 bolivars to the dollar to 6.30 bolivars to the dollar.

The devaluation had been widely expected by analysts in recent months, though experts were unsure about whether the government would act while President Hugo Chavez remained out of sight recovering from cancer surgery.

It was the first devaluation to be announced by Chavez's government since 2010, and it brought down the official value of the bolivar by 46.5 percent against the dollar. By boosting the bolivar value of Venezuela's dollar-denominated oil sales, the change is expected to help alleviate a difficult budget outlook for the government, which has turned increasingly to borrowing to meet its spending obligations.

Planning and Finance Minister Jorge Giordani said the new rate will take effect Wednesday. He said the old rate would still be allowed for some transactions that already were approved by the government.

Venezuela's government has had strict currency exchange controls since 2003 and maintains a fixed, government-set exchange rate. …