Venezuela Country devalues currency in crisis dollar sale

It was the latest in a series of moves to ease a crisis in a country stricken by soaring inflation and shortages of food and medicine.

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A hooded demonstrator protests against the government of President Nicolas Maduro in Caracas on May 31, 2017 play

A hooded demonstrator protests against the government of President Nicolas Maduro in Caracas on May 31, 2017

(AFP)
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Crisis-hit Venezuela devalued its currency by 64 percent in a dollar auction that aimed to stabilize its foreign exchange market, officials said Wednesday.

Under an overhauled official exchange system, the government let investors bid for the dollars at a new higher rate in what President Nicolas Maduro said was an effort to undermine the black market.

It was the latest in a series of moves to ease a crisis in a country stricken by soaring inflation and shortages of food and medicine.

The US bills sold at a rate of 2,010 bolivars per dollar, said Pedro Maldonado, president of the central bank's Currency Auction Committee.

He told reporters the rate was "an unequivocal indication that we are beginning a process of economic recovery."

But the rate represented a sharp devaluation compared to 721 bolivars under the previous system -- and still far below the black market rate, currently around 6,000 bolivars per dollar.

The central bank sold $24 million overall, mostly to companies importing foreign goods.

"The amount assigned was laughable. It shows the lack of currency," economist Jesus Casique told AFP.

The result was announced after an outcry over US bank Goldman Sachs's decision to buy $2.8 billion in bonds issued by Venezuela state oil company PDVSA.

The opposition said that move gave a lifeline to Maduro.

Casique said the dollar auction "will not boost productivity, that is why they decided to cash in the PDVSA bond with a discount of 69 percent, to give the official exchange rate a breathing space."

Constitutional reform

Essential foods and medicines in Venezuela are priced at a special low fixed dollar exchange rate. But due to shortages, many other items are only available on the black market at a much higher rate.

Opposition activists hold signs spelling the phrase, "Consult with the people" during a protest against the government of Nicolas Maduro in Caracas on May 31, 2017 play

Opposition activists hold signs spelling the phrase, "Consult with the people" during a protest against the government of Nicolas Maduro in Caracas on May 31, 2017

(AFP)

The crisis has prompted deadly unrest in street protests by Maduro's opponents demanding elections to remove him from power.

Maduro says the crisis is the result of an "economic war" backed by the United States.

Venezuela's economic collapse has been driven by the fall in prices for its crucial oil exports since 2014.

Authorities on Wednesday began signing up candidates for a planned constitutional reform body, a move that has inflamed deadly unrest stemming from anti-government protests.

Opponents of socialist President Nicolas Maduro say he aims to keep himself in power by stacking the planned "constituent assembly" with his allies.

The electoral authorities have called on candidates to sign up online on Wednesday and Thursday to seek election to the 545-member assembly, which will be tasked with writing a new constitution.

The center right-led opposition coalition, the Democratic Unity Roundtable, has vowed not to take part.

"I hope no one will commit treason by taking part in such an absolutely fraudulent process," opposition leader Henrique Capriles said.

Bursting point

Opposition and government supporters meanwhile staged the latest in two months of street protests, with fresh clashes between prosecutors and police.

Prosecutors say the unrest has left 60 people dead so far.

Riot police agents are attacked with fireworks by demonstrators, during a protest against President Nicolas Maduro's government, in Caracas on May 31, 2017 play

Riot police agents are attacked with fireworks by demonstrators, during a protest against President Nicolas Maduro's government, in Caracas on May 31, 2017

(AFP)

"The game seems to be deadlocked. The government is becoming more and more repressive and the opposition is continuing its protests in the street," said political analyst Luis Salamanca.

"There could be a total, serious confrontation, permanent chaos. Anything could happen here -- even a popular uprising."

Opposition congressional speaker Julio Borges visited European lawmakers on Wednesday in Brussels, where he warned Maduro's plan will trigger more bloodshed.

At a news conference, Borges asked for "help" from EU institutions so that "those who have violated human rights are also hit with sanctions."

Venezuela's Foreign Ministry Delcy Rodriguez said on Twitter that request "exceeded all imaginable limits of immorality."

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