Devaluation of Currency in Venezuela
Venezuela took measures last Friday took devalue it’s currency in an attempt to solidify the government finances, said the Finance Minister. He is reported to have President Hugo Chavez’s signature approving the measure.
The currency will be set at 6.3 to the dollar. The exchange rate had previously been set at 4.3
This devaluation should help balance the government’s books by giving more more Bolivars for the dollars Venezuela earns by selling it’s oil on the world market, and hopefully will solidify the government’s finances.
Pressure to devalue the currency was discussed by Venezuelen government officials for the past several months as the black market exchange rate rose to more than four times the official rate of the bolivar.
The country not only needs to solidify the government finances, but needs to start reinvesting the money earn from the sale of oil into the infrastructure of the state owned oil production services. Unfortunately this infrasturucture is very much out of date, and eventuallywillseriously affect the production of oil.
Already we see serious shortages in public servies in Venezuela. Hopefully these shortages will be addressed as the government earnsmore money for their oil on the global market.
Of course we will have to wait and see. Fortunately a photograph of President Hugo Chavezwas posted in the New York Times this week. He is accompanied by his two daughter in his hospital room in Cuba.
