Sunday, January 10, 2010

Chavez Orders Currency Devaluation by 50%

This is going to be bad news for Venezuelans, and everyone else for that matter. This 'gaming' of currencies rarely ends well. Should this be considered Chavez admitting his government control economy has failed miserably; not that it is the first sign.

"Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.

In a bid to jump-start the recession-hit economy of South America's top oil exporter, Chavez on Friday announced a dual system for the fixed rate bolivar.

It devalues the currency to 4.3 and 2.6 against the dollar, from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to limit the impact of the measure on consumer prices.

The opposition seized on fears that prices for imported goods will double as shoppers formed lines of more than a hundred people outside some stores in the capital Caracas.

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