President Hugo Chavez announced the devaluation last week, cutting the exchange rate of the bolivar against the dollar by half for oil income and for imported goods deemed nonessential in a move to bolster state coffers.
The measure strengthens the financial balance sheet in South America’s largest oil exporter but risks angering the leftist government’s supporters ahead of a parliamentary election in September if prices rise and inflation speeds up.
Prices for international flights have already doubled, as the airlines charged the new 4.3 rate that applies to non-essential items.
Since 2005 the bolivar was fixed at 2.15.
Thousands of shoppers mobbed stores to snap up imported TVs and computers, worried their savings will lose value.
To calm nerves, Chavez sent troops to monitor prices in shopping districts.
At least 70 retailers have been shuttered in raids that continued yesterday.
National Guard soldiers armed with automatic rifles forced closure of a hardware store in the coastal town of La Guaira.
“We found a list where they were clearly remarking prices by up to 150 percent,” said Jose Useche, and inspector with the government’s consumer watchdog.
Soldiers and officials closed two supermarkets belonging to a Colombian retailer controlled by France’s Casino.
Chavez is a strong believer in state intervention in the economy and has nationalized many industries in the OPEC nation. He uses currency controls to prevent capital flight.
The leftist leader is gambling he can underpin his 50 percent support with increased spending in the lead up to the election to offset negative reaction price rises may bring.
Opposition leaders called on the government to issue payments to families in extreme poverty to soften the impact.
“This subsidy would help relieve the inflationary effect of the announced measures for the poorest families,” an alliance of opposition parties said in a statement.
The new dual exchange system fixes a rate of 2.6 to the dollar for essential items like food and medicine, but sets a much lower rate of 4.3 to the dollar for other goods and oil exports.
