CARACAS, Venezuela, Jan. 9 (UPI) -- Venezuelan President Hugo Chavez has sharply devalued the country's currency as big fluctuations in the oil market have caused financial stress.
Chavez announced the move Friday during a televised Cabinet meeting, setting a single rate for most imported items of 4.30 bolivars to the U.S. dollar, a 100 percent devaluation from the previous rate of 2.15, The New York Times reported.
The newspaper said Chavez also announced a separate rate of 2.6 bolivars to the dollar for basic foods, hospital equipment and other essential items.
The moves comes as response to financial stress on the country since the price of oil, Venezuela's chief export, fell from highs of $145 per barrel in July 2008 to below $34 a barrel by the end of that year before climbing through 2009 to about $83 this month. Analysts say the country's economy contracted by 2.9 percent last year thanks to turmoil in the oil industry and a lack of business confidence after caused by Chavez's nationalizations.
At the Cabinet meeting, Planning Minister Jorge Giordani indicated has been instituted to make exports, such as coffee and cacao. Independent economists told the Times the government could also gain more bolivars for oil exports, thus allowing Chavez to boost social spending.