Chavez orders money changer raids for currency crash

* Chavez says websites, money changers to be raided

* Crash in currency and high inflation behind action

* Foreign exchange market paralyzed by new rules

By Frank Jack Daniel

CARACAS, May 14 (BestGrowthStock) – Venezuela’s President Hugo
Chavez said on Friday authorities were set to raid money
changers and close websites listing exchange rates, his latest
bid to stop the crashing bolivar currency.

Venezuela’s foreign exchange market (Read more about international currency trading. ) is already paralyzed
after the government moved to end speculation and stem the fall
of the bolivar with new rules some economists fear will cause
economic turmoil.

Under a reform passed by legislators on Thursday, the
central bank will oversee all transactions in the market where
the bolivar is traded freely via securities.

Chavez threatened to close all the country’s brokerages and
financial trading houses after the bolivar lost 25 percent
against the dollar this year, but Friday’s raids appeared to be
limited to small illegal money changers in Caracas.

“The first raids should be starting, money changing houses,
illegal dollar sales where they say they sell gold” Chavez said
in a meeting with governors. “We are battling a mafia…I said
before, we are going to give them the mother of all blows.”

Caracas has a number of downtown money changers who operate
on street corners and in small offices in an area known for its
gold trade.

The weak bolivar is raising the cost of consumer products
in the import dependent country and helped drive inflation to 5
percent last month. Economic problems are hurting Chavez’s
ratings ahead of September legislative elections.

In addition to the currency market, Venezuela has two fixed
rates of 2.6 and 4.3 bolivars to the dollar. Under the new
rules the central bank is likely to seek to establish a floor
and ceiling for the bolivar market.

A popular blog, Dolar Paralelo
(http://bonosvenezuela.blogspot.com/) disappeared from the web
on Friday evening after Chavez warned of impending legal
actions against sites he said promoted illegal dollar trading.

“The dirty market, because it’s racist to call it black,
why don’t we say white? Dirty market, illegal dollar market,”
he said.

Chavez introduced rigorous currency rules in 2003 to stop
capital flight after a political crisis. A loophole allows
currency trading via bond swaps and similar mechanisms.

Stock Investing
(Reporting by Frank Jack Daniel; editing by Carol Bishopric)

Chavez orders money changer raids for currency crash