Venezuela Rush To Buy Imports After Devaluation

Thousands of Venezuelans descended on local shops, hoping to buy imported goods before a currency devaluation ordered by President Hugo Chavez ramps up prices.

The firebrand leftist leader announced Friday that non-essential imports would be subjected to an exchange rate of 4.3 bolivars per dollar, a doubling from 2.15 per dollar today. The higher exchange rate will apply to items such as automobiles, telecommunications, tobacco, beverages, chemicals, petrochemicals and electronics.

That prompted throngs of customers to queue in front of electronics stores, while those who made it inside navigated crowded aisles to grab refrigerators, stereos and other imported goods.

“We decided that today was the day to buy a television before the price explodes,” a customer told AFP.

“We went to various shops but the queues were too long, finally we found one that was less crowed, but the products just disappeared. Everybody wants to buy today.”

In a move that will lessen the impact of the devaluation on poorer Venezuelans, who have traditionally formed the backbone of Chavez’s support, the president said an exchange rate of 2.60 bolivars to the dollar would apply to basic goods.

On the black market, a dollar costs around six bolivars.

The bolivar’s devaluation was the first since 2005, and was designed to aid public finances that have withered amid reduced oil revenues and a rapidly contracting economy. Critics said the move would allow Chavez to boost public spending ahead of elections in September, but would severely damage the health of the economy. Since coming to office, the president has sought to remake the Venezuelan economy, vowing to create a more equitable, socialist model.That has initiated a string of nationalizations of foreign firms and measures that have sent inflation soaring to around 25 percent. Critics said the move would further drive up inflation.

“It would be foolish on my part to deny that this measure will have an impact on prices,” said Finance Minister Ali Rodriguez.

Economist Orlando Ochoa said that was the understatement of the year, and that Venezuelan consumers would pay big for the dual rate move. The measures really are “throwing gasoline on a fire” as far as inflation is concerned, Ochoa said.

“Prices are going to go up, but the government needs more income and it will be getting more for its exports,” he said.


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