CARACAS (Reuters) – Venezuelan authorities have raided four money-changing businesses and arrested one man in the start of a clampdown on what President Hugo Chavez calls capitalist speculators distorting the currency market.
The Attorney General’s office said yesterday that the businesses were illegally selling dollars in violation of Venezuela’s currency exchange rules.
The raids came late on Friday shortly after Chavez promised action to prevent unregulated foreign exchange activities following the bolivar’s crash against the dollar on a free-floating “parallel” market.
“The bourgeoisie have gone crazy, they want money, money and more money,” Chavez said yesterday in his latest daily speech since last weekend lambasting the currency traders.
He promised to “break” the “parallel” exchange market.
The bolivar had weakened about 25 per cent to more than 8.0 to the dollar this year on that market, which exists to feed unmet demand for dollars set by the government at two official rates of 4.3 and 2.6 for essential items.
Venezuela’s National Assembly voted this week to put that “parallel” market under supervision of the Central Bank, essentially paralyzing trade while the institution works on specific new regulations.
Officials have said the bank will set some sort of range for the dollar, and a list of “serious” money-changers will be authorized to do business.
Analysts have warned this strategy may backfire and create a fourth, illegal market for dollars, and possibly hasten another devaluation by the government early next year. The bolivar was devalued from an official rate of 2.15 in January.
