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CARACAS, Nov 21 (Reuters) – Venezuela’s bolivar currency weakened on Monday past 2,000 per dollar on the black market for the first time following a 44.82 percent depreciation in the last month, according to website DolarToday.
The government of President Nicolas Maduro maintains exchange controls that sell one U.S. dollar for every 10 bolivars to import priority goods such as food and medicine. The system also sells a dollar for every 660 bolivars for non-essential items.
But businesses frequently buy on less favorable terms on the black market because they cannot obtain dollars at either of the more preferential rates.
Venezuela is struggling with runaway inflation and Soviet-style product shortages as a result of a decaying socialist economic system and low oil prices that have cut into hard currency earnings. Maduro has said his government is victim of an «economic war.»
The black market is used as a benchmark by Venezuelan businesses seeking to set prices and foreign investors gauging the health of the economy.
DolarToday on Monday showed the rate reaching 2,192.65.
The sharp depreciation followed 14.2 percent increase in the total supply of bolivars in the last month, according to central bank statistics. Adding bolivars to the economy generally puts pressure on the exchange rate.
The funds that banks have available to make commercial loans, an indicator known as «excess bank reserves,» nearly tripled in the same period, according to the central bank.
(Reporting by Caracas newsroom; Editing by Diane Craft)
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