Venezuela fights economic war with increased currency rules

Staff Writer
Columbus CEO

(c) 2013, Bloomberg News.

CARACAS, Venezuela — Venezuela has signaled it will impose increased currency and price regulations with the creation of an agency to manage foreign exchange and imports as well as a broad review of consumer websites.

The South American country will create the National Foreign Trade Center to manage foreign currency and import policies, President Nicolas Maduro said Wednesday, attributing rising inflation and a decline in the bolivar on the black market to an "economic war" being waged by political opponents.

"Inflation is a problem of a rentier economy that bases its prices on speculation, an economy that fundamentally sets its prices based on currency speculation, not on costs of goods and services," Maduro said in a speech that lasted almost four hours.

The moves seek to stabilize the economy and promote economic growth, while "neutralizing" factors perturbing the economy, Maduro said, without providing specific details on how the new agency would function. Venezuela, which devalued the bolivar by 32 percent in February to 6.3 per dollar, has been unable to arrest the decline of the bolivar on the black market, where companies and individuals unable to access the official rate pay as much as 58 bolivars per dollar.

Speculation mounted last week that the South American country would devalue the bolivar for the second time in a year after the publication of a decree in the official gazette that authorized the creation of a new exchange rate for tourists.

Maduro last month re-started dollar auctions at an undisclosed rate in an effort to stem product shortages in time for Christmas as annual inflation reached almost 50 percent in September.

The former bus driver, who was elected in April after President Hugo Chavez's death in March, said 2013 has been a "complex and difficult year." The "fictitious" black market dollar is used to "perturb" the economy as part of the economic war and "psychological disturbance," Maduro said.

The country's economic institutions have been "exhausted" and cannot help to construct socialism, he said, adding that the country would soon start a nationwide operation against price speculation and hoarding, using part of the armed forces. He said the government would set "fair" maximum prices on all products.

"The measures announced yesterday have the seal of Jorge Giordani," Asdrubal Oliveros, director of Caracas-based consultancy Ecoanalitica, said in a telephone interview, referring to the country's planning minister. "The measures are going to translate into fewer dollars assigned to the private sector so that they can prioritize public imports."

Venezuela will also review three e-commerce websites including as part of government efforts to combat price speculation, Maduro said, also naming and, which sell cars and real estate, respectively. Telephone calls made Wednesday by Bloomberg News to the three companies seeking comment were unanswered.

"The people that manage these websites in Venezuela will be summoned immediately so they can explain how they set speculative and false prices that rob our Venezuela," Maduro said.