Venezuela devalues currency amid dollar shortage

CARACAS, Venezuela — Venezuela’s currency devaluation took effect on Wednesday amid questions about how the government can get a grip on 22-per cent inflation and satisfy growing demand for dollars to pay for imported goods. Some economists predict that the devaluation won’t solve problems such as a dearth of dollars for imports and shortages of some staple foods. The country’s fifth devaluation in a decade established a new government-set rate of 6.30 bolivars to the dollar, replacing the previous rate of 4.30 bolivars. Venezuela also has a flourishing black market in which bolivars are being traded for more than three times the new official rate. Economist Jose Guerra said he still doubts that the Central Bank and government currency agency will be able to meet heavy demand for dollars, especially now that officials have eliminated a state-run bond trading system that had provided dollars at a second-tier rate. Vice President Nicolas Maduro, who has taken on additional authority during the past two months while President Hugo Chavez has been away in Cuba for cancer treatment, has said the government has enough dollars from oil earnings to meet all the needs of the economy. But Planning and Finance Minister Jorge Giordani has said that dollars will go toward “priority” goods, leading some economists to conclude that the government seems to be stiffening its currency exchange controls.