Venezuela tightens control of foreign exchange

AP News
Posted: Nov 06, 2013 7:44 PM
Venezuela tightens control of foreign exchange

CARACAS, Venezuela (AP) — President Nicolas Maduro is tightening control of Venezuela's foreign exchange system and intensifying the pursuit of currency speculators that the government accuses of waging an "economic war" against his rule.

As mounting shortages and galloping inflation undermine Maduro's leadership, the president took to the airwaves Wednesday to announce a slew of measures he said are designed to protect Venezuelans from "parasitic bourgeoisie" speculators.

Foremost among the measures is the creation of a centralized agency to administer the nation's dollars so that the hard currency is used to purchase needed imports and not wind up in the illegal black market.

Maduro also ordered the military to join civilian price inspectors in going after merchants that the government alleges are gouging consumers and hoarding toilet paper, shoes and other basic goods that have become harder to find in recent weeks. The central bank's scarcity index reached 20 percent in August, close to a record.

"Get your papers in order, get your shop in order," Maduro said in a rambling three-hour speech, during which he also attacked popular eBay-like retailer for setting prices artificially high. "If you're looting the people it doesn't matter what your name is, the law will find you."

Maduro's speech was widely anticipated after Venezuela's currency plunged to a record low 58 bolivars per dollar on the black market this week — nine times the official rate of 6.3 per dollar. The president said Tuesday that he and his advisers worked past midnight to prepare the economic package.

However, the measures disappointed many analysts, who said only a maxi-devaluation of the bolivar and the dismantling of decade-old exchange controls can curb the currency's free-fall. Any tough economic measures are likely to be postponed until after municipal elections on Dec. 8, they said.

Maduro's approval rating has slipped by about 10 points since his election in April, to 41 percent at the start of last month, according to the latest poll by local firm Datanalisis.

The decline in support has emboldened the opposition, which is trying to frame next month's vote for mayors in more than 300 cities as a referendum on Maduro's rule.