By Frank Jack Daniel
CARACAS, Jan 11 (Reuters) – Venezuelan bond prices leapt on Monday after President Hugo Chavez ordered a devaluation of the bolivar currency, a move that strengthens the finances of South America’s top oil exporter but risks alienating the leftist’s supporters.
Venezuela’s benchmark 2027 bond soared nearly 7 percent in price on Monday in trading on the first business day following the devaluation, announced by Chavez on Friday night.
The measure has triggered a frantic shopping spree in the capital Caracas, as people predicted the new dual currency system would lead to higher prices for imported goods.
“This is going to affect everything, and of course, the hardest hit are those of us who have the least,” said Rafael Acosta, 63, an employee of a store selling work clothes.
Under the new system, the bolivar is fixed at 2.60 per dollar for basic items like food and government purchases, with a second rate of 4.3 for goods deemed nonessential and for oil income.