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October 31, 2014
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Venezuela unveils new market for dollars

Demonstrators hold a national flag during a rally to show their support for Venezuelan President Nicolás Maduro’s government in Caracas, Venezuela, on Saturday.

Critics see massive devaluation in free-floating forex system; pregnant woman killed in unrest

CARACAS — President Nicolás Maduro’s cash-strapped government unveiled a new currency market yesterday that allows Venezuelans to buy and sell dollars legally for the first time since 2010.

The move has been called a giant devaluation by the opposition, with two-time presidential candidate Henrique Capriles taking to Twitter to denounce the “black Monday” overhaul that he said will further erode the savings of poor Venezuelans already suffering from 57 percent inflation. The nation’s mounting economic woes are among the main drivers of protests that began last month seeking to force Maduro to resign.

The nation’s mounting economic woes are among the main drivers of protests that began last month seeking to force Maduro to resign.

Maduro’s Socialist government has been increasingly safeguarding its shrinking supply of oil dollars, leading it to fall behind on payments to foreign suppliers and exacerbating shortages of imported goods in an oil-dependent economy where manufacturing is thin.

With decade-old currency controls in place, Venezuela’s bolívar currency this year nose-dived on the black market to one-12th of its official value. Venezuelans turn to the black market when they cannot purchase hard currency from the government at the official rate of 6.3 bolivars per dollar.

Economists said the new “Sicad 2” exchange system could alleviate some of the pent-up demand for dollars, and indeed the bolivar has rallied on the black market since details of the policy change emerged in recent weeks, according to Dólar Today, a website that tracks illegal trading in the currency.

Under the new system, the Central Bank matches dollar buyers and sellers who make bids through authorized banks and brokerages. While Oil Minister Rafael Ramírez said there is no limit on the amount or rate at which dollars can be acquired, satisfying demand will hinge on enough dollars coming to market from the state-run oil company, PDVSA, which is the source of 90 percent of Venezuela’s export earnings.

The Central Bank is expected to publish daily the reference rate used in accepted transactions. Yesterday, Venezuelan newspapers El Universal and El Nacional reported the rate fluctuated around 52 bolivars per dollar.

Death toll rises

Meanwhile, officials said that the death toll from weeks of anti-government protests rose to 36 after a pregnant woman was shot dead near Caracas and a soldier was killed in the western state of Mérida.

Supporters of both sides and members of the security forces have been among those killed in the nation’s worst unrest in a decade, sparked by demonstrations against Maduro that kicked off last month.

Francisco Garces, mayor of Guaicaipuro municipality near the capital and a member of the ruling Socialist Party, said the 28-year-old pregnant woman was shot dead on Sunday during a protest.

“We categorically reject the demonstrations that caused this death,” Garces told reporters.

The state prosecutor’s office said the woman, identified as Adriana Urquiola, was shot after getting off a public bus halted by a barricade set up by protesters.

In the western state of Mérida, a National Guard sergeant died yesterday after being shot in the neck during clashes there, according to a senior military source and hospital officials.

Streets barriers have become flashpoints for violence between radical supporters of both sides, who are sometimes armed. Members of the security forces have also come under fire from nearby buildings as they try to dismantle the barricades.

Mérida and neighbouring Táchira state, adjoining the border with Colombia, have been harder hit by the violence.

Last week, intelligence agents arrested the opposition mayor of San Cristóbal, the capital of Táchira, and accused him of fomenting “civil rebellion.”

Another mayor of an opposition-run municipality in central Carabobo state was jailed for 10 months after a court ruled he failed to comply with an order to take down barricades.

The protests began in February with sporadic demonstrations by university students. They intensified after three people were killed following a February 12 rally in downtown Caracas.

Moves Against Lawmaker

The demonstrators want political change and an end to high inflation, shortages of basic foods, and one of the highest rates of violent crime in the world.

In addition to the moves against the opposition mayors, Maduro’s supporters in Congress have requested a criminal investigation of an opposition legislator for crimes including treason relating to the protests.

The National Assembly Speaker, Diosdado Cabello, said yesterday that María Corina Machado was no longer a lawmaker after she spoke out against the government last week during a meeting of the Organization of American States (OAS).

“She’s no longer a deputy,” Cabello told reporters, adding that her acceptance of an offer from Panama to speak at the OAS was unconstitutional. We’re giving instructions that this woman not be allowed back into parliament for this session.”

A constitutional lawyer consulted last week by Reuters said Machado could not lose her parliamentary immunity without approval from both the state prosecutor and the Supreme Court, and then another vote in the National Assembly.

Machado, a 46-year-old engineer elected to Congress in 2010, is frequently pilloried by Socialist Party supporters as an out-of-touch elitist with an especially wealthy background.

Despite her high profile during the protests and heroine status for hardline opponents, others in the opposition’s more moderate ranks criticize her as shrill and overly confrontational.

The lawmaker, who says the president and his allies preside over a dictatorship, said she would not give up without a fight.

“Mr. Cabello, I will remain a deputy in the National Assembly for as long as the people of Venezuela want me to,” Machado said on Twitter.

Regional support

The demonstrators are demanding the president resign, while Maduro says they want a coup like the one 12 years ago that briefly ousted his predecessor, the late Hugo Chávez.

The numbers of protesters are far fewer than those who turned out against Chávez in 2002, and there have been no signs that the current unrest threatens to topple Maduro.

With the exception of the Panamanian president, Latin American leaders have voiced support for Maduro. A delegation from regional bloc Unasur will arrive in Caracas today, with the intention of “accompanying the Venezuelan government in the dialogue it is seeking.”

The Venezuelan government said yesterday it will denounce the opposition before international bodies, “starting at Unasur,” Maduro said yesterday.

Herald with AP, Reuters, Télam

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