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Venezuela Frees Up the Nation’s Forex System

© REUTERS / Jorge SilvaSamples of Venezuela's currencies are displayed at the Central Bank building in Caracas
Samples of Venezuela's currencies are displayed at the Central Bank building in Caracas - Sputnik International
Venezuela allows a free-floating exchange rate for the country's currency.

Venezuela's President Nicolas Maduro, speaks during the annual state-of-the-nation address at the National Assembly in Caracas, Venezuela, Wednesday, Jan 21, 2015 - Sputnik International
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Venezuelan officials announced the allowing of a free-floating exchange rate for the country's currency, media report.

Finance Minister Rodolfo Marco Torres said the new system would be "totally free" with "the market itself setting the exchange rate." But officials said trades would have to be made through authorized banks or exchange houses and only people with dollar-denominated bank accounts can take part.

For 70 percent of crucial imports, including medicines and other staples, the exchange rate will remain the current 6.3 bolivars per one US dollar. For the remaining 30 percent of consumer goods the rate is changing to 12 bolivars for one greenback.

The government has also been selling limited amounts of hard currency at a third rate, around 52 bolivars to the dollar, but officials say that rate will now be replaced by a more transparent system in which dealers and buyers exchange currency on a supply and demand basis.

The measure is seen by experts as an attempt by the Venezuelan authorities to deal with the towering debt deficit, which currently stands at a hefty 20 percent of the country’s GDP.

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