Thursday, December 30, 2010

Venezuela Devalues Currency

Venezuela has devalued its currency for the second time this year.

The government will lower the exchange rate on so-called essential goods such as food and medicine by 40 percent to 4.3 bolivars per dollar on January 1. Ouch.

This brings this exchange rate in line with its other fixed foreign exchange rate.

This is certainly a major indication severe money printing in Venezuela. Indeed, price inflation, at 27%, is the highest among 78 countries tracked by Bloomberg.

Venezuela is clearly in the race to become the next Zimbabwe.

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