Venezuela studying tax on currency trade - Chavez

www.forbes.com Reuters, 01.26.03, 1:13 PM ET

PORTO ALEGRE, Brazil, Jan 26 (Reuters) - Venezuelan President Hugo Chavez on Sunday said the country was studying putting a levy on speculative financial market transactions similar to the proposed Tobin Tax on foreign currency trading.

The tax, named after Nobel Prize-winning U.S. economist James Tobin who first floated the idea in the 1970s, has been championed by some as a way of reducing speculation and raising funds for developing countries. But it has been largely rejected by finance ministers and central bankers in Europe.

Last Wednesday, Venezuela, the world's fifth-biggest oil exporter, closed its currency market for five trading days as economically vital oil production was slashed by an 8-week-old strike to demand Chavez resign and make way for elections.

"We are currently protecting our international reserves from speculative attacks," Chavez told reporters shortly after arriving in this southern Brazilian city. "We are studying a tax like the Tobin one for financial transactions."

Earlier, the leftist leader said oil production was currently at 1.32 million barrels per day, but would rise to 2.6 million in about one month. That is still below the oil industry's usual levels of about 3.1 million barrels per day.

"In one month, or a bit more, we will we will be close to the OPEC (Organization of Petroleum Exporting Countries) quota," Chavez said.

The Venezuelan leader is in Porto Alegre to attend a demonstration of support for his besieged government at the World Social Forum (WSF), a six-day meeting of leftist intellectuals, grass-roots social groups and nongovernmental organizations. He was due to hold a news conference later on Sunday.