Venezuelans rush to buy imports after devaluation

Chavez has announced a currency devaluation and the introduction of a two-tiered official exchange rate as his government aims to boost a sagging economy.

Venezuelans rush to buy imports after devaluation

Venezuelan President Hugo Chavez has announced a currency devaluation and the introduction of a two-tiered official exchange rate as his government aims to boost a sagging economy.

Thousands of Venezuelans descended on local shops, hoping to buy imported goods before a currency devaluation ordered by Chavez ramps up prices.

The official exchange rate of 2.15 bolivars to the dollar, in effect since 2005, will be replaced beginning Monday with a dual-rate regime.

Importers of essential items such as food, medicine and heavy machinery will be able to buy dollars at a rate of 2.60 bolivars to the greenback.

The school supply and science and technology sectors, as well as public sector imports and remittances, also will be favoured by that rate, which will represent a 17 percent devaluation.

But a higher rate of 4.30 bolivars to the dollar will apply to most of the economy, including the automobile, chemicals, rubber and plastics, appliances, textile, electronics, tobacco, beverages and telecommunications sectors.

'Non-essential imports are going to get more expensive,' especially vehicles and shoes, Chavez said in a cabinet meeting Friday that was partially televised by state-run VTV television.

"I've been lining up for two hours outside to buy a television and two speakers because by Monday everything is bound to be double the current price," said Miguel Gonzalez, a 56-year-old engineer standing in the tropical sun outside a popular store.

Opposition politicians seized the opportunity to criticize Chavez's economic management, with Caracas Mayor Antonio Ledezma saying standards of living would drop.

"If you need to buy a refrigerator for your house tomorrow, it's going to cost you twice as much as it did up till Friday, Ledezma said.

The government acknowledges prices will rise after the devaluation, but say the upward trend will be more gradual.

State run television and radio stations avoided using the word "devaluation," preferring the word "adjustment." One pro-Chavez radio station responded to critics of the measure by playing a popular Argentine song called "Imbecile."

With oil crowding out other sectors of the economy, Venezuela heavily relies on imports for consumer goods, leaving it subject to big price swings depending on the exchange rate.


Agencies


Last Mod: 10 Ocak 2010, 11:12
Add Comment