Venezuelan authorities backed by soldiers closed a total of 70 of retail outlets for price-gouging after a currency devaluation that triggered a frenzy of shopping but met with favor by international markets. Among the outlets ordered temporarily closed are at least two supermarkets belonging to a Colombian retailer controlled by France's Casino group. President Hugo Chávez [2] announced the devaluation last week, cutting the exchange rate of the bolivar against the dollar by half for oil income and goods deemed nonessential.
Authorities blasted the retailers for sparking a panic. "Now they are trying, on top of current prices that are already elevated, to raise them much more," said Trade Minister Eduardo Saman, who also heads a government consumer watchdog. Saman charged that prices were being manipulated the opposition to hurt Chávez's popularity ahead of parliamentary elections in September. (Reuters [3], Jan. 13)
The currency devaluation should give state oil company PdVSA an immediate and much-needed boost to its budget. "We've been selling dollars cheaply for too long," Chávez said Jan. 9. "This [devaluation] will have a huge impact on the national fiscal situation, and will strengthen our oil industry." (Dow Jones [4], Jan. 13)
Standard & Poor's raised PdVSA's rating to stable from negative Jan. 13, two days after similarly raising the Venezuelan government's rating. The devaluation means each barrel of oil will double PdVSA's income once the funds are repatriated into local currency, the agency found. But the agency expressed concern that cash flow would remain negative due to funding for social programs. (Dow Jones [5], Jan. 13)
See our last posts on Venezuela [2], the econocataclysm [6], and the global struggle for control of oil [7].
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