Jan. 9 (Bloomberg) — Venezuela devalued its currency by half yesterday, the first such action since March 2005, as President Hugo Chavez seeks to pull the economy from recession amid falling oil revenue.
Chavez said the bolivar will be devalued to 4.3 per dollar from 2.15 per dollar for most imports. A second, subsidized peg of 2.60 bolivars per dollar will be used for importing food, medicine and machinery intended to boost the economy’s competitiveness.
The Central Bank, which agreed yesterday to transfer $7 billion in reserves to the government, will “intervene” to prop up the bolivar in the unregulated parallel market, Chavez said, without providing details.
“This is to boost the productive economy, to reduce imports that aren’t strictly necessary and to stimulate exports,” Chavez, 55, said in comments on state television. “We need to stop being a country that only exports oil.”
Chavez is trying to maintain spending for his 21st century socialist revolution as South America’s largest oil exporter fails to emerge from its first recession in six years. The government is seeking to stem its falling popularity and the highest inflation rate among 78 economies tracked by Bloomberg ahead of parliamentary elections scheduled for September.
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