NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

Nervous Venezuelans panic buy TVs after devaluation

Published 01/09/2010, 06:03 PM
Updated 01/09/2010, 06:06 PM

* Shoppers fear sharp price rises for imported goods

* Opposition fuels shopping spree with warnings

By Eyanir Chinea

CARACAS, Jan 9 (Reuters) - Shouting "buy, buy, the world is going to die," Venezuelans went on a frantic shopping spree on Saturday following a sharp currency devaluation that is expected to drive up prices.

President Hugo Chavez announced a dual system for the fixed rate bolivar on Friday night while much of the country was watching a baseball game.

But on Saturday, word spread quickly as people read the morning papers and listened to the radio in Caracas cafes.

Shoppers crammed into electronics stores, eager to snap up imported televisions and computers ahead of the anticipated price hikes.

"I've been lining up for two hours outside to buy a television and two speakers because by Monday everything is bound to be double the current price," said Miguel Gonzalez, a 56-year-old engineer standing in the tropical sun outside a popular store.

Opposition politicians seized the opportunity to criticize Chavez's economic management, with Caracas Mayor Antonio Ledezma saying standards of living would drop.

"If you need to buy a refrigerator for your house tomorrow, it's going to cost you twice as much as it did up till Friday, Ledezma said.

The government acknowledges prices will rise after the devaluation, but say the upward trend will be more gradual.

State run television and radio stations avoided using the word "devaluation," preferring the word "adjustment." One pro-Chavez radio station responded to critics of the measure by playing a popular Argentine song called "Imbecile."

With oil crowding out other sectors of the economy, Venezuela heavily relies on imports for consumer goods, leaving it subject to big price swings depending on the exchange rate.

Older Venezuelans are accustomed to sharp losses in the value of their money, with numerous devaluations and currency regimes over the last three decades of economic turmoil.

Inflation, the highest in the Americas, at 25 percent last year, reached 103 percent in 1996 after a previous president lifted exchange and price controls.

Chavez's high-spending policies during an oil bonanza fueled a massive consumer boom and fast growth that shuddered to a halt when oil prices plunged a year ago.

The sharp drop in oil revenues also undermined the bolivar and made a devaluation inevitable at some point. (Additional reporting by Ana Isabel Martinez; Writing by Frank Jack Daniel; Editing by Xavier Briand)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.