Chávez Devalues Currency Amid Oil Fall

By SIMON ROMERO
NYT

CARACAS, Venezuela — President Hugo Chávez announced a sharp devaluation of Venezuela’s currency on Friday night, a move that reflects the financial stress faced by his government since the price of oil, the country’s top export commodity, fell from its peak as a result of the global financial crisis.

The action, which Mr. Chávez had repeatedly ruled out in the past, came after Venezuela’s economy contracted by 2.9 percent in 2009. Hampered by disarray in the oil industry and nationalizations that have shattered business confidence, the economy is expected to remain sluggish this year even as other large Latin American economies show signs of vibrancy.

“This is all about one objective: revitalizing the productive economy,” Mr. Chávez said in a cabinet meeting that was broadcast live on state television.

Mr. Chávez said he would maintain currency controls and create two different exchange rates for the currency, the bolívar. He also said he would clamp down on black-market currency trading in a bid to slow capital flight; officials have already increased audits of travelers abroad to limit spending of hard currency outside the country.

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