Venezuela to keep forex market closed this week

www.forbes.com Reuters, 01.27.03, 6:53 PM ET

CARACAS, Venezuela, Jan 27 (Reuters) - Venezuela's government, fighting a crippling opposition strike, will extend a suspension of foreign exchange trading for at least this week as the government finishes drawing up and implementing currency controls, government sources said Monday.

President Hugo Chavez's government, whose vital oil income has been slashed by the 57-day strike, last week suspended currency trading for five market days prior to introducing foreign exchange curbs. The government said the measure was intended to halt the slide of the bolivar and slow capital flight.

"The market will remain closed at least for all of this week because the implementation of currency control measures is very slow," one government source, who asked not to be identified, told Reuters.

Another source said the government was studying various proposals on how to implement the measures. Officials were speaking with banks on what exchange rate would work under the new controls. The currency trading suspension could last until next Tuesday, Feb. 4, one of the sources said.

The opposition strike, started on Dec. 2 to force Chavez to resign and call elections, has driven Venezuela's economy deeper into recession and sent the bolivar tumbling against the U.S. dollar.