Venezuela tightens currency controls

[aaron]

http://ca.finance.yahoo.com/news/ven...002151007.html

Venezuela tightens control of foreign exchange system to go after currency speculators

CARACAS, Venezuela (AP) — President Nicolas Maduro is tightening control of Venezuela's foreign exchange system and intensifying the pursuit of currency speculators that the government accuses of waging an "economic war" against his rule.

As mounting shortages and galloping inflation undermine Maduro's leadership, the president took to the airwaves Wednesday to announce a slew of measures he said are designed to protect Venezuelans from "parasitic bourgeoisie" speculators.

Foremost among the measures is the creation of a centralized agency to administer the nation's dollars so that the hard currency is used to purchase needed imports and not wind up in the illegal black market.

Maduro also ordered the military to join civilian price inspectors in going after merchants that the government alleges are gouging consumers and hoarding toilet paper, shoes and other basic goods that have become harder to find in recent weeks. The central bank's scarcity index reached 20 percent in August, close to a record.

"Get your papers in order, get your shop in order," Maduro said in a rambling three-hour speech, during which he also attacked popular eBay-like retailer MercadoLibre.com for setting prices artificially high. "If you're looting the people it doesn't matter what your name is, the law will find you."

Maduro's speech was widely anticipated after Venezuela's currency plunged to a record low 58 bolivars per dollar on the black market this week — nine times the official rate of 6.3 per dollar. The president said Tuesday that he and his advisers worked past midnight to prepare the economic package.

However, the measures disappointed many analysts, who said only a maxi-devaluation of the bolivar and the dismantling of decade-old exchange controls can curb the currency's free-fall. Any tough economic measures are likely to be postponed until after municipal elections on Dec. 8, they said.

Maduro's approval rating has slipped by about 10 points since his election in April, to 41 percent at the start of last month, according to the latest poll by local firm Datanalisis.

The decline in support has emboldened the opposition, which is trying to frame next month's vote for mayors in more than 300 cities as a referendum on Maduro's rule.

I guess nothing has changed there.

[lektrode]

Re: Venezuela tightens currency controls

http://ca.finance.yahoo.com/news/ven...002151007.html

I guess nothing has changed there.

guess not, eh - this probably doesnt have anything to do with it:

Venezuela's annual inflation hits 54.3 pct

Nov 7 (Reuters) - Venezuela's consumer prices rose 5.1 percent in October, accelerating from 4.4 percent the previous month to their second fastest pace in six years, the central bank said on Thursday.


The 12-month inflation rate climbed to 54.3 percent, the latest blow to President Nicolas Maduro's efforts to stabilize the economy. Heavy public spending and a creaking currency control system left businesses struggling to import consumer staples, machinery and replacement parts.


Venezuela's monthly inflation readings have been rivaling yearly price increases of other Latin American nations, threatening to weaken Maduro's base of support among the poor that benefited from the oil-financed largesse of late President Hugo Chavez.
October's inflation was led by alcohol and tobacco prices which rose 8.6 percent. The important food and non-alcoholic drinks sector was up 5.6 percent.


The central bank's "scarcity index", which reflects shortages of basic consumption goods, reached 22.4 percent, its highest level since the start of 2010.


Maduro says inflation and product shortages are caused by an "economic war" led by unscrupulous businesses backed by ideological rivals in the United States who are seeking to undermine his socialist administration.


On Wednesday, he held a press conference to announce economic measures including a new price control mechanism, grassroots committees to stop businesses over-charging, and a new body to oversee the decade-old exchange control mechanism.


Government supporters also point to social programs such as free health clinics and pensions for senior citizens, created under Chavez's leadership, as examples of social welfare initiatives that benefit the poor and offset inflation.


Critics say state takeovers of hundreds of businesses during the Chavez era has crimped the private sector's ability to provide goods and services - coinciding with an aggressive expansion of the money supply that has been far faster than the rate of economic growth.


Monetary liquidity, often a key measure of the total money supply in the economy, grew 70 percent in the last 12 months as the central bank provided financing to state oil company PDVSA to help it make social expenditures.


At the same time, the country's currency control system provides dollars at the official rate of 6.3 bolivars, but the black market rate for greenbacks is now almost 10 times that.


Businesses that get official dollars to import goods face a growing temptation to flip their currency on the black market rather than bringing in the goods, diverting resources away from productive activity needed for steady growth.


The difficult economic panorama has spurred long lines at supermarket, as well as occasional scuffles, to acquire basic goods.
Shoppers carrying bags stuffed with milk, toilet paper and corn flour are often stopped by strangers on the street asking them where such products can be bought.

guess the only other question becomes: how much longer before same starts happnin here in The US ?
(in spite of krugmans steady (state of) denial that it will)