Chavez Says He ‘Revalued’ Bolivar With Parallel Gains

[Judi Lynn]

Chavez Says He ‘Revalued’ Bolivar With Parallel Gains (Update1)
By Daniel Cancel

Jan. 15 (Bloomberg) -- Venezuelan President Hugo Chavez said that he has “revalued” the country’s currency, not devalued it, after strengthening the value of the bolivar 10 percent in the so-called parallel market since announcing the first devaluation in 5 years.

Chavez said that the government will strengthen the parallel rate to 4.3 per dollar as part of a “strong intervention” by the central bank by selling dollars to the local market to meet demand for foreign currency. The bolivar traded at 5.87 today, traders said.

Chavez devalued the bolivar as much as 50 percent on Jan. 8 and implemented a multi-tiered exchange system to prevent dollar outflows and close a growing budget deficit. Imports deemed essential goods will receive an exchange rate of 2.6 bolivars per dollar and nonessential goods will receive 4.3 per dollar.

“If we take into account that the majority of prices were set at the parallel market and we’re now going to strongly intervene in that market, a lot of prices should actually go down,” he said during a speech to announce the government’s achievements of 2009. “From that point of view, we’ve actually revalued the bolivar, a true revaluing of the currency, not devaluation.”

More:
http://www.bloomberg.com/apps/news?pid=20601086&sid=aqHZhC_tDyaE