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Fri Feb 8, 2013, 04:03 PM

Venezuela announces currency devaluation

Source: AP

CARACAS, Venezuela (AP) — Venezuela's government announced Friday that is devaluing the country's currency, a 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. It was the first devaluation to be announced by President Hugo Chavez's government since 2010.

Planning and Finance Minister Jorge Giordani said the new rate takes effect immediately, though the old rate would still be allowed for some transactions that already were approved by the state currency agency.

Read more: http://bigstory.ap.org/article/venezuela-announces-currency-devaluation

6 replies, 1798 views

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Reply Venezuela announces currency devaluation (Original post)
Bosonic Feb 2013 OP
MADem Feb 2013 #1
quadrature Feb 2013 #3
MADem Feb 2013 #4
quadrature Feb 2013 #5
MADem Feb 2013 #6
AtheistCrusader Feb 2013 #2

Response to Bosonic (Original post)

Fri Feb 8, 2013, 04:42 PM

1. This has been anticipated for some time.

This will not be popular with the masses...as it is, it's next to impossible to find a chicken for your pot, now it will be more expensive, too.

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Response to MADem (Reply #1)

Fri Feb 8, 2013, 09:37 PM

3. the official rate means little to most people

only 'friends of Hugo' get the official rate

the price of rice or milk
in the grocery stores, will not
change because of the
new exchange rate.

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Response to quadrature (Reply #3)

Fri Feb 8, 2013, 09:57 PM

4. I invite your attention to the referenced article.

But analysts said the move would not be sufficient to end the government's budget woes or balance the exchange rate with an overvalued currency. Economists predicted higher inflation and a likely continuation of shortages of some staple foods, such as cornmeal, chicken and sugar.

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Response to MADem (Reply #4)

Fri Feb 8, 2013, 10:56 PM

5. the official rate applies to two groups

1) visiting tourists
2) companies that are usually friendly to Hugo, they get Dollars/Euros for imports.
.........................
everybody else pays the black market rate.
...................
the prices in, subsidized state-run grocery stores, can be anything, as these
prices do not reflect world conditions

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Response to quadrature (Reply #5)

Fri Feb 8, 2013, 11:18 PM

6. I understand your point, but the fact remains that there will be inflationary pressure as a

consequence of this action.

NYT is saying the same thing: http://www.nytimes.com/2013/02/09/world/americas/venezuela-devalues-currency-amid-shortages-and-inflation.html?_r=0

Venezuela Devalues Currency by a Third Amid Shortages and Inflation


CARACAS, Venezuela — Venezuela announced Friday that it was devaluing its currency, a step that had long been deemed necessary but could push the spiking inflation even higher....

Pressure to devalue had been building for months, as the black market exchange rate rose to more than four times the official rate. The imbalance was evident in the prices of many goods. A Big Mac at McDonald’s costs 70 bolívars, or $16.27, at the official pre-devaluation rate.

But the devaluation will also make imported goods more expensive, which will probably make inflation worse. Inflation for the 12 months ended on Jan. 31 was 22.2 percent, one of the highest rates in Latin America.

Surging inflation could cause political problems for the government. But the exchange rate had reduced the dollars available to importers, leading to shortages of goods like sugar, chicken and toilet paper. Many analysts believe that voters blame the government more for shortages than for inflation.

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Response to Bosonic (Original post)

Fri Feb 8, 2013, 06:16 PM

2. As long as they don't change to a new currency again.

Tired of patching code.

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