Venezuela Devalues Own Currency

People of Venezuela went into a shopping frenzy after their president, Hugo Chavez, announced a dual rate devaluation of the nation’s currency, the bolivar.venezuela-bolivar-currency

Chavez put the value of the currency at 4.30 to a US dollar for most imported items and transactions. This is 100% increase from the previous rate of 2.15 to a dollar that was in effect since 2005.

The central bank will subsidize the second and stronger rate of 2.6 for basic commodities such as foods and medicine to limit the impact for consumers.

The attempt was made in a gamble that the benefits of a weaker economy will offset faster inflation. The country is deeply affected by recession and the current move by Chavez reflects the difficulties he is facing both economically and politically. A parliamentary election is up on September.

Meanwhile, citizens trooped down to stores, specifically electronic stores, to buy televisions and computers – imported items that are affected by the 4.3-bolivar:1-dollar rate.

Last month, North Korea revalued its currency, the won, from a rate of 100 to 1.