CARACAS, Friday January 15, 2010 | Update
59 percent of imported items will be bought at VEB 4.30 per dollar

Ricardo Sanguino, the president of the Finance Committee, National Assembly (AN), says that there are no reasons to raise prices before April

The devaluation will increase the price of imported goods whereas inflation forecasts are between 35 percent and 40 percent in 2010 (File photo)
Friday January 15, 2010  01:24 PM

The Foreign Exchange Administration Commission (Cadivi) determined that 59 percent out of a total of 6,394 items that can be imported will receive foreign currency at an exchange rate of VEB 4.30 per US dollar whereas 41 percent of the items will receive foreign currency at an exchange rate of 2.60 per dollar.

The products to be imported at the lowest exchange rate belong to sensitive areas such as food, medicines, personal care items, inputs and machinery.

As a result of the decline in oil prices in 2009, Cadivi cut by 50 percent the authorizations of US dollars and a significant proportion of imports were bought with the parallel exchange rate.

According to a report prepared by research firm Ecoanalítica, including the de facto devaluation in 2009, the private sector imports were made at an average exchange rate of VEB 3.36 per dollar.

According to the report, when the devaluation announced on January 08 is taken into consideration, the exchange rate in 2010 is expected to average VEB 4.05 per US dollar.

"Based on the above figures, the average devaluation faced by the private sector is 20.5 percent, substantially lower than estimates made by economic players," the report says.

Meanwhile, Ricardo Sanguino, the president of the Finance Committee, National Assembly (AN), told state-run news agency ABN that price adjustments should be made from April.

Growing inflation
After weighing the impact of devaluation, the effect of the injection of Venezuelan bolivars to public spending and negative expectations related to Venezuelan economy, investment banks and financial experts said that the inflation rate will fluctuate between 35 percent and 40 percent.

As a result, Venezuela's inflation will continue being the highest in Latin America.

Translated by Gerardo Cárdenas

Non-stop extraction of mineral riches

Oil and gas; gold and diamonds; coltan, coal, iron, bauxite, copper: the Venezuelan economy is extractive, as it relies on taking mineral substances from the earth for sale or trade.

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