Chavez's new exchange rates may boost inflation: analysts

[The Northerner]

Source: Agence France-Presse

AFP - Venezuela will be forced to pour greenbacks into an unofficial "gray" market here to support the national currency, fueling what is already Latin America's highest inflation rate, analysts predicted.

President Hugo Chavez announced on Friday the bolivar would trade at 4.30 to the dollar for "non-essential" goods -- double the present rate -- and at a rate of 2.60 bolivars to the dollar for basic goods, in an election-year move aimed at favoring the poor.

"The government is going to rein in the impact (of the changes) on the gray-market dollar by flooding the market with a lot of dollars," economist Gustavo Rojas told AFP, with inflation already around 25 percent.

While the government says it aims to get rid of the gray-market dollar at some point down the line, economists shrug off the idea.

Read more: http://www.france24.com/en/20100112-chavezs-new-exchange-rates-may-boost-inflation-analysts

[naaman fletcher]

1. there is no "may" about it.

[ChangoLoa]

2. I'll risk a prediction that I would hate to see happening

50-70% inflation in 2010. That would be really sad to see. 2/3 of people's savings simply gone.

[robcon]

6. I don't think inflation will be as high as 50-70%.

Though there's no doubt the purchasing power of the Venezuelan bolivar will decline, and therefore prices will go up.

[WriteDown]

3. I see the unrec squad has already been here. nt

[Judi Lynn]

4. Venezuela Debt Rating Outlook Raised to Stable by S&P

Venezuela Debt Rating Outlook Raised to Stable by S&P
By Steven Bodzin

Jan. 11 (Bloomberg) -- Venezuela’s credit rating outlook was raised to stable from negative by Standard & Poor’s, which said last week’s currency devaluation will ease the country’s “fiscal pressures.”

S&P rates Venezuela BB-, three levels below investment grade.

President Hugo Chavez on Jan. 8 devalued the 2.15-per dollar exchange rate, setting a level of 2.6 for imports of essential items including food and medicine and a rate of 4.3 for “non-essential” products.

“The latest government devaluation of the currency, combined with prospects for stable oil revenues, will reduce Venezuela’s fiscal pressures,” S&P said in a statement.

More:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4220825

[WriteDown]

5. Everything will be okay as long as people can get their TV's in time...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4221897

[fascisthunter]

7. yup