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Venezuela devalues bolivar 16.6 percent
Mon February 9, 2004 08:50 AM ET
CARACAS, Venezuela, Feb 9 (Reuters) - Venezuela's government devalued its bolivar currency 16.66 percent Monday to 1,920 bolivars to the U.S. dollar from the year-old fixed exchange rate of 1,600 bolivars to the greenback.
The widely anticipated adjustment came as leftist President Hugo Chavez faces a possible recall referendum on his five-year rule in the world's No. 5 oil exporter.
The decision to devalue was published in the official state gazette. The devaluation had been expected after the 2004 budget passed late last year used an average exchange rate of 1,920 bolivars to the dollar.
Venezuela put in place strict currency and price curbs a year ago to shore up the battered bolivar and stem capital flight after political conflict and a two-month strike tipped the economy into a sharp downturn.
But tight state control over access to hard currency has fostered a thriving black market where the exchange rate has risen to around 3,000 bolivars to the U.S. dollar.
Chavez, a former paratrooper elected in 1998, said Sunday that the currency control regime would stay in place although the government expects to ease access to dollars.
The government says the controls have helped shore up Venezuela's foreign reserves to $22.4 billion and improved the oil-rich country's sovereign rating. But private sector leaders complain the regime has stifled their businesses.
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