Hugo Chavez's bipolar currency logic
Chavez has devalued his currency implementing a tiered system of capital controls. He says that he is doing this to stimulate exports in non-oil related items. Never mind that all the companies that were exporting in a significant fashion such as rice, cement and steel have all been nationalized. What it really is is a way of doubling taxes to the oil sector without having to renegotiate contracts with the oil companies, many of which are smarting from the last round of Chavez expropriations. Via Uuniversal:
Economy Venezuelan President Hugo Chávez announced late on January 8 the implementation of a new exchange rate that includes two official prices for the dollar. The first exchange rate will be VEB 2.60 per dollar (previously at VEB 2.15), and the so-called "oil dollar" at VEB 4.30.
The ruler also reported that the Central Bank of Venezuela (BCV), jointly with the Executive Office would step in the foreign exchange market to prevent speculative foreign exchange operations.
The two official rates will be in force for two different sectors of the economy. The VEB 2.60 per US dollar rate will be for food, health, imports of machinery and equipment, science and technology, as well as everything related to the public sector, family remittances, remittances of US dollars to Venezuelan students abroad, consulates and embassies in the country. It will include retirees, pensioners and special cases.
Meanwhile, the car industry, trade, telecommunications, chemicals, steel industries, computers, rubber and plastics, electrical appliances, textiles, electrical services, construction, electronics, graphics, tobacco and beverages, among others, will be covered by the "oil dollar" at VEB 4.30 per dollar..
"We want these measures to stimulate exports. We want Venezuela to become a country that exports and stop being dependent exclusively on oil," Chávez said in justifying the decision.