Venezuela's bolivar sank for a sixth straight day in black market trading as a two-month tumble in oil, the country's biggest export, fueled speculation the government will devalue the official exchange rate.
The bolivar fell 2 percent to 5.05 per dollar, leaving it down 21 percent since Sept. 5, traders said. Oil, which accounts for about 90 percent of Venezuela's exports and half of tax revenue, has dropped 17 percent this month to $95.75 a barrel amid concern a deepening U.S. financial crisis will add to a slowdown in global growth. ``There's a lot of doubt now about how solid the government's position is,'' said Tulio Bracho, a trader at Activalores Sociedad de Corretaje in Caracas. ``When oil prices fall like this, it makes the government's budget tighter and there's more speculation about a devaluation.''
Venezuelans turn to the parallel market when they can't get permission from the government to buy foreign currency at the official exchange rate of 2.15 per dollar. President Hugo Chavez imposed restrictions on currency trading amid a nationwide oil industry strike in 2003.
Chavez, emboldened by a six-year oil rally that sent prices to a record $147.27 on July 11, has ramped up spending this year, using public funds to nationalize the country's biggest cement maker, third-biggest bank and top steelmaker. The government will likely pay $11.6 billion for the nationalizations announced so far, including last year's takeover of four heavy crude joint ventures in the country's Orinoco belt, Caracas-based consulting firm Ecoanalitica said last month.
Oil rebounded today, rising 5 percent, after its biggest two-day decline in almost four years. Crude oil futures have dropped 35 percent from the July 11 record high.
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