UPDATE 3-Venezuela announces new currency system, large devaluation seen
(Adds reaction, details)
By Corina Pons and Brian Ellsworth
CARACAS Feb 10 (Reuters) - Venezuela on Tuesday launched a new foreign exchange platform that will likely devalue the bolivar heavily in efforts to bolster state coffers amid tumbling oil revenue, but risk a spike in already soaring inflation.
The change amounts to an easing of 12-year-old currency controls and marks a small step toward market economics as the state-led model created by late socialist leader Hugo Chavez struggles with shortages, swelling grocery lines and recession.
However, the changes by Nicolas Maduro's government do not eliminate the unwieldy three-tiered exchange structure seen by investors as the country's principal stumbling block to economic growth.
The change will likely lead to billions of dollars in write-downs by foreign corporations with exposure to Venezuela including General Motors Co, household goods maker Procter & Gamble Co and drugmaker Merck & Co Inc.
The new platform, called Marginal Currency System or Simadi, is the third system in a three-tier exchange control mechanism and will allow for legal trading of foreign currency based on supply and demand, said Finance Minister Rodolfo Marco.
"This third mechanism is open, free, in which bidders and buyers exchange offers," Marco said during a press conference with Central Bank President Nelson Merentes.
The currency controls have been providing U.S. dollars at three different rates: 6.3 bolivars for food and medicine, and two complementary rates of around 12 bolivars and 52 bolivars for other goods through systems known as Sicad I and Sicad II. Continuación...