Venezuelan today announced foreign exchange curbs to shore up international reserves and the bolivar currency after a two-month opposition strike that has battered the oil-reliant economy.
Under the new currency regime, Mr President Hugo Chavez said the government had set a fixed exchange rate of 1,596/1,600 bolivars to the US dollar.
The Venezuelan currency last traded at 1,853 bolivars to the dollar when the government halted foreign exchange trading on January 22nd while it drafted the controls. Mr Chavez also announced planned price controls on basic goods.
The Venezuelan leader said foreign debt payments and imports of basic foods and medicines would be given priority under the new mechanism.
Foreign companies must register with the government to repatriate profits, the president said. The Central Bank will oversee domestic currency transactions, but the new administrative office will have discretion over who receives US dollars.
Mr Chavez said the controls were being introduced to counter what he called the "sabotage" to the economy. He repeated threats to limit dollar access to opponents he accuses of trying to oust him. "Not one dollar more to the coup mongers," he said.
Anti-Chavez business leaders had said they feared currency controls would be used to punish firms who participated in their strike by restricting their access to the US dollar.
The strike, started on December 2nd by unions, private sector leaders and opposition parties, piled economic pressure on the government by slashing vital oil exports.
But the stoppage later faltered and most businesses have since reopened, with only state oil workers still on strike.