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Venezuela alters currency system but keeps three tiers
Venezuelan President Nicolas Maduro said he was modifying Venezuela's complex currency controls but would stick to a three-tier system with cheap dollars guaranteed for food and medicine imports at the existing strongest rate of 6.3 dollars.
Currently, Venezuela operates three rates - 6.3 for essential goods, and two rates via the central bank known as Sicad 1 and Sicad 2 which offer limited amounts of dollars for around 12 and 50 bolivars respectively.
Maduro said Sicad 1 and Sicad 2 would be merged, though he did not say what the new rate would be.
A third mechanism would be created to offer dollars via private brokers, he said, without giving details.
VENEZUELAN PRESIDENT NICOLAS MADURO:
"A system of three markets, the prioritised system of 6.3 (bolivars for one dollar) in order to protect our economy and our society. An auction system, taking the best of the experience of Sicad 1 and a system of exchange in that they can participate. In this way, I will call on them [business people], so there will come a set of decisions to stimulate the participation of the private sector," said Maduro.
Maduro also said that Venezuela's inflation rate was over 60 percent in 2014.
"Although we had an economic decline of 2.8 % (2014 ), a very high inflation, above 64 % , there are real factors of the economy, but there are factors induced with the idea of socially destroying our country."
Maduro also said that the price of crude oil would not return to $100 per barrel. He did not say what timeframe he was referring to, but his comment came in the context of preparing Venezuelans for a major cut in revenues thanks to the fall in global crude prices since mid-2014.
"Oil will not return to 100 (dollars a barrel), it will not return, so we need to produce, to substitute imports, generate new sources of income for the country," he said in the speech, promising that all Venezuela's budget commitments would be honoured in 2015 despite the nation's plunging revenues.
"I believe that the time has come [to increase the price of gasoline], I trust in the national conscience, in the conscience of the country," he added.
Global oil prices have tumbled almost 60 percent since June, hitting five-year lows as growing production and tepid global demand has caused a supply glut and prompted oil producers to scale back spending.
Maduro said Venezuela's crude, which trades at a discount to other benchmarks due to its greater heavy-oil content, was at $38 a barrel - compared with $99 in June.
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