Venezuelans Storm Stores to Buy Flat Screen TVs After Devaluation
January 12, 2010
(ChattahBox)– In the wake of President Hugo Chavez’s announcement that he plans to devalue Venezuela’s currency, shoppers rushed to electronics stores to buy big-screen televisions and other consumer goods over the weekend, before prices could skyrocket out of control. Consumers who weren’t quick enough were greeted with empty store shelves, as stores quickly sold out of their merchandise. In the first devaluation in five-years, multinational corporations face an uncertain future, as they prepared to take an economic hit. Although the devaluation is expected to boost the troubled country’s credit rating, by reducing the deficit, inflation could climb as high as 60 percent, by some estimates. The devaluation and soaring inflation will have a huge and immediate negative impact on Venezuelan consumers, according to Bloomberg.
According to the report by Bloomberg:
“Chavez on Jan. 8 devalued the 2.15-per dollar exchange rate, setting a level of 2.6 for imports of items including food and medicine and a rate of 4.3 for “non-essential” products. He said the central bank would also start to defend the bolivar in the unregulated parallel market, where it sank yesterday to a four-month low of 6.48.”
Chavez threatened to close businesses that are caught jacking up prices. The state-run Bolivarian News Agency reported that government officials temporarily closed 70 stores of the 96 that were inspected yesterday for “incurring in price markups and speculation.”
The devaluation comes on the heels of a country-wide shortage of electricity and basic consumer goods. Chavez recently restricted operating hours for shopping malls, casinos, and public administration offices, to reduce electricity consumption. And Christmas Lights were frowned upon this holiday season.
It’s going to be a rough year for Venezuela.
See Business Week for more.