Venezuela Devalues Currency By 37% As Maduro Announces 62-Fold Increase In Gasoline Prices

Maybe because between the specter of defaulting in under three months, the threat of handing over its gold to Deutsche Bank, or the reality of rampant hyperinflation and a collapsing society, the already crushed population of Venezuela did not have enough things to worry about, moments ago Venezuela’s Nicolas Maduro unveiled a double whammy of “shock and awe” when the socialist president not only announced the latest devaluation of the country’s official currency, but also presented his countrymen with the first gasoline price increase since 1996.

These moves represent the latest attempt to stem a widening economic crisis, though critics of the socialist leader quickly dismissed the moves as insufficient.

On the devaluation side, the latest measure of desperation will lower the strongest official exchange rate by 37% to 10 bolivars per dollar from 6.3, and streamline the previous three-tiered system into a dual exchange rate mechanism. The weaker of the two rates will be a “free float” based on an existing system that currently sells dollars at around 200 bolivars, Maduro said.

As Reuters reports, critics immediately questioned the latter claim, noting that the government has repeatedly announced “free-floating” systems that withered away precisely because authorities never allowed them to be determined by demand.

Meanwhile, Venezuela’s true “free floating”, market-clearing currency, the black-market “dolar today” recently plunged to over 1,000 per dollar, and was at 1,dolar today. It is this currency that Maduro has sought to eliminate by actually suing the website that reports what it is on a daily basis.

That was the largely irrelevant awe, especially since virtually nobody transacts at the official exchange rate which is over 100 times stronger than Venezuela’s true currency level.

As for the shock, it came in the form of 62-fold increase in the price of 95-octane gasoline to 6 bolivars/liter.