CARACAS (Reuters) – Venezuela will begin holding foreign exchange auctions on Tuesday, President Nicolas Maduro said in a Monday evening broadcast, as part of a broad economic plan to help the struggling OPEC nation emerge from a hyperinflationary crisis.
Maduro on Friday announced a massive minimum wage hike, a 96 percent devaluation of the bolivar currency and a plan to peg prices, pensions and the bolivar currency’s exchange rate to the petro, an elusive state-backed cryptocurrency.
Opposition critics and business leaders called the plan “incoherent” and predicted it will fail like repeated economic reform efforts under Maduro that quickly stalled.
“We will have a new floating exchange rate… it will start tomorrow,” Maduro said, adding that the government as of next week plans to hold three auctions per week, which would later increase to five.
“The president of the Central Bank and the Finance Minister will explain the terms of the first auction,” he said.
Venezuela’s currency control system, first created 15 years ago, provided subsidized foreign exchange throughout the decade-long oil boom.
But the 2014 fall in oil prices left the system struggling to provide dollars to the economy, leaving businesses unable to import goods and services and spurring product shortages.
Venezuela’s annual inflation rate in July topped 80,000 percent, according to the opposition-run congress, and the International Monetary Fund estimates it will reach 1,000,000 percent by year-end.
Maduro says his government is the victim of an “economic war” led by his political adversaries, with the help of Washington.
(Reporting by Deisy Buitrago; Writing by Brian Ellsworth; Editing by Richard Borsuk)