unless Chavez changes the law about the gold to be sold to the state,being at fix rate ,Agapov and other gold seller will actually collect the same amount of Bolivars in the devalued form and therefore have a loss of almost 50% if changed in USA $.
Nothing to smile about.
Monday January 11, 2010 REUTERS -
Venezuelan President Hugo Chavez on Sunday ordered soldiers to seek out businesses raising prices after a sharp devaluation of the bolivar currency last week, saying his government will not tolerate price speculation. Chavez's government devalued Venezuela's bolivar currency on Friday, setting two rates of 2.6 and 4.3 against the dollar. Following are some facts about the bolivar. * Chavez introduced currency controls in 2003 in a bid to prevent capital flight during a period of political turmoil in the South American oil-exporter. He fixed the bolivar at 1,600 to the dollar and put restrictions on foreign currency purchases. * Friday's devaluation was the third since then, with the bolivar dropping to 1,920/dollar in 2004 and 2,150 in 2005. In 2008, the government lopped three zeros from the currency and issued new bills and coins.
* The currency in Venezuela's oil-dominated economy has a recent history of instability. Financial turmoil in the 1990s led to rapid loss in value, with bands, fixed rates and a free float all unsuccessful in stopping the decline.
* The bolivar's weakening is tied to soaring inflation, which peaked at 103 percent in 1996 when the government of former President Rafael Caldera lifted price and foreign exchange controls. Inflation in 2009 was 25.1 percent, the highest rate in the Americas.
* In addition to the two new pegs, the bolivar is traded on a tolerated, semi-legal black market. On that market a dollar costs about six bolivars. One of the aims of the devaluation is to rein in rampant black market speculation.
* The complicated exchange system is confusing to outsiders, but Venezuelans are experts at navigating multiple rates. Those with access to dollars at the old official rate have long been able to make a fast buck selling them again on the black market.
* Critics of the new system encourages corruption as officials can offer access to the better of the three rates. Chavez says the government is planning to "aggressively intervene" in the black market, but has not given details.
* During the 1970s, Venezuela's currency was one of the strongest in the region, enabling its people to enjoy plenty of foreign travel and shopping. Venezuelans were known, one joke went, for always saying "Dame dos!" (Give me two!) when stocking up on expensive goods in Miami during those days.
* Those good times were partially repeated when oil prices were high a few years back and travelers had easy access to the 2.15 rate. Since last year when oil prices fell, the government has slowed the flow of cheap dollars. (Reporting by Frank Jack Daniel in Caracas; Editing by Sandra Maler)
