Venezuelan Bolivar currency devaluation
Economy April 7th, 2010
President Hugo Chavez announced the devaluation of the currency for the first time since 2005 that aimed to help the Venezuelan oil company’s performance.
Chavez said Bolivar currency has two exchange rates are 2.60 per dollar for the transaction of government priorities and the 4.30 per dollar for other transactions. This led to the devaluation of the exchange rate Bolivar down 17% or 50%, depending on his tier.
High exchange rate, or so-called oil dollars, will double the Venezuelan oil company earnings when converted into local currency. Over half the oil and gas revenues from the government budget, but the income was shrunk due to lower world oil prices over the past year.
Chavez said the main exchange rate will be used for food, health products, school supplies, supplies for economic development and others.
He said the policy of the new exchange rate aims to improve economic productivity, eliminate unnecessary import, and export mestimulasi.
Imports expected to fall in exchange rates are less favorable such as automotive, telecommunications products, computers, home equipment, alcohol, and tobacco.
Government official exchange rate set at 2.15 per U.S. dollar Bolivar since 2005.
Devaluation was expected to move domestic economy and limit the international impact. The Government has introduced a system of strict exchange rates since 2003 to prevent capital flight.
Chavez also stressed the government will intervene in the bond market.
