Venezuela Delays Changes to Exchange System

        CARACAS, Venezuela--President Nicolás Maduro said on Tuesday that the country's three-tier currency exchange rate system, derided as a major contributor to Venezuela's economic crisis by detractors, would be revamped sometime in the new year.
        Mr. Maduro made the comments during an end-of-year review that he previously signaled would include concrete measures to revive an economy that was revealed to be in recession by the country's central bank earlier in the day.
        Instead, the president repeated accusations that Venezuela's economic woes were the work of Washington, among other ideological enemies of his leftist government. The leader vowed next year would see sweeping policy changes, with him personally taking over management of the economy in a newly installed "war-room" type center slated to be up and running in the presidential palace Jan. 3.
        "You will see me every day and in real time making decisions," Mr. Maduro said. "I'm convinced that 2015 will be the year of a great transformation in Venezuela."
        The president, however, has repeatedly delayed making major policy adjustments that many experts have said should include cutting lavish domestic fuel subsidies and scrapping the cumbersome exchange system.
        "The central theme of this announcement was the exchange," said Caracas-based analyst and pollster Luis Vicente Leon in a Twitter post. "But the president limited himself to saying a change was coming without saying how or when or what."
        Though many analysts agree changes could keep the cash-strapped country from edging toward a default of state-issued debt, Mr. Maduro lacks the political clout to take potentially painful measures with his approval rating at record lows. The 52-year-old leader, who narrowly won office in a contested 2013 vote, will lead his fractious ruling party into legislative elections in late 2015.
        "The announcements could shed some light about the conviction and the political capacity of the administration to introduce meaningful corrections to the currently unsustainable policy mix," said analysts for Goldman Sachs in a client report.
        Mr. Maduro said major revisions of the currency exchange rate system would be announced by the finance minister and central bank president at an unspecified time in 2015. He also said that he hasn't ruled out raising the price of gasoline but was convinced that the appropriate time had not arrived. The fuel subsidy costs the government some $12 billion annually.
        Venezuela has three official currency exchange rates that include a swap of 6.3 bolívares per dollar for priority items and weaker rates of around 11 and 50 bolívares to the dollar for other goods.
        Economists say that the tight controls have sparked a shortage of dollars in the country that has deepened with the recent swoon in oil prices. In Venezuela's robust currency black market, a reference point for many retailers, a greenback fetches nearly 200 bolívares.
        Before the president's address, the central bank released long-delayed data on economic output that was last released in April.
        According to the bank's report, Venezuela's economy contracted 4.8% in the first three months of the year compared with the same period in 2013. It shrank 4.9% in the second quarter of the year, followed by a retreat of 2.3% in the July through September period.
        The figures also registered inflation at 63.6% in the 12 months through November, the highest mark in the region.
        The central bank release blamed the poor-performing economy in large part on antigovernment protests that spread nationwide in February and claimed more than 40 lives before easing months later. Critics of the leftist government have said that ever increasing centralized control over the economy has resulted in deep distortions and pushed the economy toward collapse.
        The central also reported that the country's balance of payment posted a surplus of $6.8 billion at the end of the July through September period with the current account showing a $899 million surplus and the capital account registering a $568 million deficit.
        Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
        Subscribe to WSJ: http://online.wsj.com?mod=djnwires
        (END) Dow Jones Newswires

        December 30, 2014 21:40 ET (02:40 GMT)

#EzequielMinaya
#Forex
#FX
#Caracas
#ExchangeSystem