Venezuela will devalue its currency for the second time since January in a bid to pull South America’s third-biggest economy out of recession.
Venezuela will unify its two fixed foreign exchange rates at 4.3 bolivars per dollar, Finance Minister Jorge Giordani said in comments carried by state television. Imports of so-called essential goods, such as food and medicine, were previously bought a rate of 2.6 bolivar per dollar.
“We think that by unifying the exchange rate, we’ll have economic growth in 2011,” Giordani said today.
Chavez devalued the bolivar for the first time since 2005 in January and created a multitiered exchange system in an attempt to spur non-oil exports and curb the consumption of luxury imports at subsidized exchange rates. A devaluation may accelerate inflation, which at 27 percent, is the highest of 78 economies tracked by Bloomberg.
Venezuela’s economy contracted for a second consecutive year on an electricity crisis, foreign currency shortages and a drop in oil production, the central bank said in a report published on its website.
Gross domestic product fell 1.9 percent this year, with the oil sector shrinking 2.2 percent and the non-oil sector contracting 1.8 percent, according to today’s report, which cited preliminary figures. The economy shrank 3.3 percent in 2009.
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