Observers call is the Black Friday in Venezuelan financial system. Hugo Chavez devalued the national currency Bolivar and the Spanish phone operator Telefonica lost one billion dollars overnight on its dividends.
Yesterday in Spain, the news about Telefonica's loses began to spread like a wildfire. Like other companies, Telefonica has not yet given an account of its total loses. The company is still deciding for which year to assume the loses, for 2009 or 2010.
The move announced Friday night in Venezuela by President Chavez has an immediate effect and requires the application of two new exchange rates in the country. All this, is within the framework established in 2003, which imposed a fixed exchange rate of the bolivar against the dollar and restricted the free movement of currencies.
Until now, the official rate or Bolivar marked 2.15 to the dollar. Now, after the 50 percent devaluation the rate is 4.30 to the U.S. dollar.
For the Government of Venezuela, however, devaluation, although not complete, is a relief. The measure will increase state revenues, which come largely from oil and is traded in dollars. This source of income will double. In return, inflation will soar in a country that lives with growth rates double digit CPI. The same will happen with prices.
By Armen Hareyan
Source: Cincodias.com
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