Venezuela's bolivar slides 3.2 pct amid strike woes

www.forbes.com Reuters, 01.14.03, 2:17 PM ET

CARACAS, Venezuela, Jan 14 (Reuters) - Venezuela's bolivar currency <VEB=>, battered by the nation's political and economic turmoil, fell 3.2 percent against the dollar on Tuesday as an opposition strike against President Hugo Chavez extended into its seventh week.

The bolivar, which has shed about 13 percent of its value since the start of the year, fell 51.75 bolivars on Tuesday to 1,612.50 bolivars to the U.S. dollar, according to the Central Bank reference rate.

The interbank rate <VEB=><VEB2=> dipped to 1,637.50 bolivars, down 4 percent from 1,572.25 bolivars to the dollar on Monday.

"People are paying whatever price for dollars because they see the situation in the country getting worse and that the bolivar is going to go through the floor," one trader told Reuters.

Traders said the bolivar slipped on strong demand for dollars as people looked to the U.S. greenback for safehaven as the national strike erodes confidence in Venezuela's economic future.

The strike has nearly ground Venezuela's vital oil production and exports to halt. The oil industry accounts for about half of government revenues. The opposition shutdown began Dec. 2, and strikers have vowed to stay out until Chavez resigns.

Chavez, a former paratrooper elected in 1998, faces increasing opposition to his left-wing reforms from foes who accuse him of driving the oil-rich nation toward economic and political turmoil. The strike has cost Venezuela about $4 billion so far, officials said.