Venezuela devalues currency by 46.5%; VEB at 6.30 per US dollar
Planning and Finance Minister Jorge Giordani announced the new foreign exchange rate valid in Venezuela
The increase in the exchange rate will help improve public accounts, which ended 2012 with a fiscal deficit of 16% of gross domestic product. The move will be a breath of fresh air for state-run oil firm Petróleos de Venezuela (Pdvsa), as the company will get more bolivars per US dollar sold to the Central Bank of Venezuela (BCV).
Additionally, chair of BCV Nelson Merentes announced that the Transaction System for Foreign Currency Denominated Securities (Sitme) has been removed. "The system was not meeting the objectives in some aspects. It was flawed," said Merentes in a press conference.
Further, he noted that authorities are to encourage US dollar accounts in Venezuela. "Since June 2012, the opening of foreign currency accounts was authorized (in Venezuela) and we will create mechanisms that facilitate these flows of foreign exchange," said Merentes.
He explained that deposits in bolivars for up to USD 2,000 monthly will be allowed in the cases specified in the relevant regulation, including the following: individuals can make transfers to their accounts abroad; they can make remittances to relatives abroad; receive pensions from abroad and payments for consulting in foreign currency.
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.