Chavez, 58, ordered the devaluation while convalescing in Cuba, where he is being treated for cancer, as the effect of last year's pre-election spending binge began to show in budget data.
The 32 percent devaluation, set for Wednesday, was predicted as a post-election measure but was kept from the electorate as Chavez clinched his fourth six-year term in October last year.
A huge upsurge in government spending, mostly to speed up welfare programs, preceded and followed Chavez's re-election but new data show oil-rich Venezuela is spending more than it's earning in exports.
More than one-third of government funding hinges on fluctuating oil prices. A spate of nationalizations of privately run corporations has slowed business growth.
Venezuela, an OPEC member and supplier of crude oil to the Unites States and neighboring countries of Central and South America and the Caribbean, is worse off than its less developed neighbors. This year marks the third fiscal year of recession in the country.
Industry analysts said the devaluation would hit exporters, including U.S. companies that sell products to the country. Members of Mercosur regional trading bloc that welcomed Venezuela's speedy entry into the organization last year would likely see their export earnings fall.
Devaluing a currency decreases the standard of living, as it makes imports more expensive but exports become more affordable in foreign markets, which could stimulate Venezuela's oil-export oriented economy.
A World Bank report said poverty is still a major challenge in Venezuela although government measures helped reduce extreme poverty from 32 percent to 19 percent of the population.
A Bank of America estimate last year predicted a devaluation could expose Venezuela to a further slowdown but could carry tax benefits for the government.
Finance Minister Jorge Giordani said the devaluation "isn't a change that was done for fiscal reasons."
"We have sufficient revenue but we need to adjust the accounts," he said. "We need an increase in efficiency and efficiency means spending less."
"We've got to do more with less," said Vice President Nicolas Maduro said on state television before the devaluation was announced. Maduro has been acting for Chavez as the president recuperates in Havana.
Chavez continues to make a slow but steady recovery from his most recent cancer surgery, Maduro announced.
"None of us is Chavez, but we all together are Chavez, if we are united," Maduro said, adding citizens are "ready to face difficulties, whatever it is," to aid in the president's recovery, El Universal reported.
Chavez, who has been Venezuela's president since February 1999, was unable to attend his swearing-in ceremony in Caracas in January.